If you’re looking for a safe and steady way to grow your savings, the Post Office Recurring Deposit (RD) scheme is one of the smartest choices available today. Many people are surprised to learn that by simply saving ₹166 per day, they can accumulate around ₹5.36 lakh over time. That’s the power of disciplined saving with interest working in your favor.
This article breaks down how the Post Office RD scheme works, how much you need to save, and how it can benefit you—whether you’re a working professional, a parent planning for your child’s future, or just someone looking to build a financial cushion.
Post Office RD Scheme
| Feature | Details |
|---|---|
| Scheme Name | Post Office Recurring Deposit (RD) |
| Daily Saving Amount | ₹166 |
| Monthly Contribution | ₹5,000 approx. |
| Tenure | 5 years (extendable) |
| Interest Rate (as of March 2025) | 6.7% per annum (compounded quarterly) |
| Total Savings in 5 Years | ₹3,00,000 |
| Interest Earned | ₹48,934 approx. |
| Maturity Amount | ₹3,48,934 (for ₹5,000 monthly deposit) |
| To Reach ₹5.36 lakh | Save ₹8,000/month for 5 years |
| Official Website | India Post |
The Post Office RD scheme is one of the best financial tools for individuals looking to save small amounts regularly and earn guaranteed returns. By saving just ₹166 per day, you can easily build a fund of over ₹3.48 lakh in 5 years. With a slightly higher investment of ₹8,000/month, you can aim for a maturity amount of ₹5.36 lakh.
What is Post Office RD Scheme and Why is it Useful?
The Post Office RD is a government-backed savings plan where you deposit a fixed amount every month for a fixed period, usually 5 years. It’s designed for people who want to build a habit of saving regularly. Since it’s backed by the Indian government, it offers guaranteed returns, making it much safer than many market-linked investments.
Think of it like this: every day, if you skip buying a cup of tea and save that ₹166, at the end of the month you’ve got ₹5,000 to invest. Over 5 years, that small daily habit turns into a substantial savings pot—plus interest.
see also: Invest only Rs 50 per day in this Post Office scheme and create a fund of Rs 35 lakh
How Saving ₹166 Daily Grows Your Wealth
Let’s break it down simply.
- ₹166/day = ₹5,000/month
- Over 5 years = ₹5,000 x 60 months = ₹3,00,000
- At 6.7% annual interest, compounded quarterly, you earn approximately ₹48,934 in interest
- Total maturity amount = ₹3,48,934
Now, you may ask—how do you get ₹5.36 lakh?
That’s easy. You simply save ₹8,000 per month instead of ₹5,000.
- ₹8,000/month = ₹96,000/year
- Over 5 years = ₹4,80,000 principal
- Interest earned = ₹56,000 approx.
- Total maturity = ₹5.36 lakh approx.
The more you save, the more your interest grows.
Who Should Consider Post Office RD?
This scheme is ideal for:
- Salaried professionals: Build a financial buffer for emergencies or future investments.
- Parents: Save for your child’s education or marriage in a low-risk way.
- Senior citizens: Supplement your retirement corpus with a guaranteed return.
- Students (age 10+ can operate an account): Develop saving habits early with small contributions.
It’s also a great option for risk-averse investors who prefer fixed returns over market volatility.
Open a Post Office RD Account
Step 1: Eligibility
Anyone can open an RD account in India Post:
- Individuals (single or joint)
- Guardians for minors
- Minors aged 10 and above
Step 2: Minimum Deposit
- You can start with just ₹100 per month
- Deposits must be in multiples of ₹10
Step 3: Account Opening Process
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- Visit your nearest Post Office
- Carry Aadhaar, PAN card, and address proof
- Fill out the RD Account opening form
- Choose between cash or Post Office savings account auto-debit
Step 4: Monthly Deposits
- Must deposit monthly, within the calendar month
- Missed payments attract a penalty of ₹1 for every ₹100/month
Step 5: Interest and Maturity
- Interest is compounded quarterly
- After 5 years, you get your principal + interest
Post Office RD Interest Rate vs Other Schemes
| Scheme | Interest Rate (2025) | Risk | Lock-in Period |
|---|---|---|---|
| Post Office RD | 6.7% p.a. | Very Low | 5 years |
| Bank RD (SBI) | 6.5% p.a. | Low | 5 years |
| FD (Post Office) | 7.1% p.a. | Low | 1-5 years |
| PPF | 7.1% p.a. | Very Low | 15 years |
| Mutual Funds | 8-12% (not guaranteed) | High | No fixed term |
Post Office RD offers one of the best low-risk options for medium-term savings. It’s great for people who want fixed income without worrying about market fluctuations.
Tips to Maximize Your Returns
- Start early: The sooner you start, the more compound interest you earn.
- Don’t miss payments: Avoid penalties by setting up auto-debit from your Post Office savings account.
- Reinvest maturity: After 5 years, reinvest in another RD or shift to PPF or FD for higher returns.
- Use for goals: Set specific goals—like vacation, house deposit, or emergency fund—to stay motivated.
- Monitor rates: Check India Post RD rates quarterly as they may change based on government policy.
see also: Where to Invest Money to Take Advantage of Section 80C Before the Tax Deadline?
Post Office RD FAQs
Q1. Is the Post Office RD safe?
Yes, it’s 100% government-backed. There’s no risk of losing your money.
Q2. Can I withdraw money before 5 years?
You can’t close the account before 3 years, but premature closure is allowed after that, with reduced interest.
Q3. Can I take a loan against my RD?
Yes. After 12 months, you can take a loan up to 50% of the account balance at a nominal interest rate.
Q4. Is TDS deducted on Post Office RD?
No TDS is deducted. However, interest earned is taxable under your income tax slab.
Q5. Can I extend my RD after 5 years?
Yes. You can extend it for another 5 years at the applicable interest rate.
