Ever since the RBI has gone on a rate-cutting spree in the last 6 months, banks and non-bank lenders have softened their fixed deposits rates significantly. Whenever bank fixed deposit rates come down, conservative small investors including senior citizens look for better options like post office savings schemes that can give them better returns than FDs and that too with safety of money. Major banks of the country, such as SBI, HDFC, ICICI, and PNB have cut interest rates since February this year as the RBI has cut the repo rate by 1% (100 basis points).

But in the meantime, there is a relief for these small investors as the central government has kept the interest rates on post office small savings schemes like Public Provident Fund (PPF), National Savings Certificate (NSC), Senior Citizen Savings Scheme (SCSS) and other schemes unchanged as on June 30, 2025. These rates are applicable for the July-September quarter (second quarter of 2025-26).

Now the question arises: where should investors invest — in government schemes or bank FDs? Let us compare it head-on on the basis of interest rates.

Also read: Small savings scheme rates for July-Sept 2025 announced: Check latest PPF, SSY, SCSS, NSC returns

5-year savings schemes vs bank FDs

Following are some popular Post Office Savings Schemes:

Post Office Time Deposit (POTD)

Post Office Time Deposit is offering 7.5% interest to all citizens for 5 years. There are Post Office schemes that are offered in four tenures. The 5-year tenure attracts a maximum 7.5% interest.

Three other FD schemes in 1-year, 2-year and 3-year tenures are offering 6.9%, 7% and 7.1% per annum interest rates to depositors.

National Savings Certificate (NSC)

The government has kept the NSC rate unchanged at 7.7% per annum for 5 years. The scheme was expected to see interest rate revision in the last review.

Senior Citizen Savings Scheme (SCSS)

Senior Citizen Savings Scheme is offering an attractive 8.2% interest, but it is only for senior citizens.

In comparison, if we look at the 5-year FDs of banks:

State Bank of India (SBI) offers 6.3% interest to general citizens and 6.8% to senior citizens.

HDFC Bank offers 6.4% (general) and 6.9% (senior citizens).

ICICI Bank offers interest at 6.6% (general) and 7.1% (senior citizens).

PNB offers 6.5% (general) and 7% (senior citizens).

Simply put, post office savings schemes offer higher interest rates than bank FDs. For senior citizens, SCSS emerges as the most attractive option with 8.2% returns. For those who want safe and assured returns for a long period, these schemes can prove to be better than bank FDs.

Also read: Open Sukanya Samriddhi Yojana account via PNB App — No branch visit needed now

Are post office schemes and bank FDs safe?

Post office schemes come with the guarantee of the Government of India, so they are considered very safe. Due to the government guarantee, these schemes are ideal for investors who want fixed interest along with protection of capital.

On the other hand, bank FD is also considered a safe option, but there is a limitation in it. Most banks come under the Deposit Insurance and Credit Guarantee Corporation (DICGC), which provides insurance up to a maximum of Rs 5 lakh on deposits (including interest). If the bank collapses, there is no guarantee of getting back the amount above Rs 5 lakh.