Investing in government savings schemes, especially the Post Office Recurring Deposit (RD), not only provides a secure avenue for your funds but also opens up opportunities for loans.
Here’s a closer look at the details you need to know.
Enhanced Interest Rates on Post Office RD
The government has recently increased the interest rates on Post Office Recurring Deposits.
From October 1, 2023, to December 31, 2023, the annual interest rate for a 5-year Post Office RD is now 6.7 percent, reflecting a 20 basis points increase from the previous 6.5 percent.
Loan Facility Against Post Office RD
Investors in Post Office RD can leverage their deposits to obtain loans. Here are the key points:
Eligibility: To be eligible for a loan against your RD, you must have made 12 installment deposits, and the RD account should be at least one year old.
Loan Amount: RD account holders can avail a loan up to 50 percent of the balance in their account.
Repayment Options: The loan amount can be repaid either in a lump sum or through installments.
Interest Rates: The interest rate for the loan will be 2 percent higher than the RD interest rate. For instance, if the RD interest rate is 6.3 percent, the loan interest rate would be 8.3 percent.
How to Avail the Loan
To avail of a loan against your RD account, follow these steps:
- Visit your post office.
- Fill out the loan application form.
- Submit the form along with your passbook.
- Complete any required formalities.
Upon completion of the formalities, you will be granted the loan.
Interest Earnings on Post Office RD
Let’s explore the returns on your investment in a Post Office RD:
Example 1: Investing Rs 5,000 per month for 5 years at an interest rate of 6.7 percent will yield Rs 56,830 in interest, resulting in a total maturity value of Rs 3,56,830.
Example 2: Investing Rs 3,000 per month for 5 years at the new interest rates will yield Rs 34,097 in interest, resulting in a total maturity value of Rs 2,14,097.
Post Office RD not only offers a systematic way to save but also provides a safety net for those seeking loans against their deposits.
Consider the attractive interest rates and potential returns as you plan your financial strategy.
