Many deposit schemes are being run by the government, banks, post office. People take the deposit scheme for savings and wait for it to mature so that they can get more money but sometimes in emergency they have to withdraw money first. There is a lot of loss in premature withdrawal of money from the deposit scheme. There is a reduction in interest and there is also a penalty. The same rule holds for the Post Office Time Deposit (POTD) scheme.
The disadvantages of withdrawing money in the post office time deposit scheme can be understood with an example. Suppose a person invested Rs 5 lakh in it for 5 years. At the time of investment, the interest rate on the deposit was fixed at 6.7 percent. Accordingly, interest of Rs 34,351 will be available every year and this interest will continue to be available for 5 years.
Loss more than FD if you withdraw money in between
The person investing in this scheme had to break the post office deposit scheme after 3 years due to the need of money in emergency. In such a situation, he will get a lump sum of Rs 4,50,140 from the post office only. Accordingly, this depositor suffered a loss of 48 per cent on interest. If this scheme is closed earlier then the loss of interest will be more. If this scheme is compared with Fixed Deposit (FD), then the customer suffers more loss.
More benefits on maturity of the scheme
At the same time, on maturity, this scheme gives more returns than FD. In this scheme, more interest is available than bank FD. But for premature withdrawal, where there is a penalty of 0.5-1.0 percent in FD, the rate of penalty is higher in POTD.
Once deposited, money will not be withdrawn for 6 months
The POTD scheme is available in four different tenures ranging from 1 to 5 years. Premature withdrawal is not allowed in this and heavy fines are levied if the money is withdrawn. For 6 months after depositing the amount, you cannot withdraw money at all. Whereas after depositing money in FD, it can be broken even on the next day.
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