Post Office has two schemes with a tenure of 5 years, one is Post Office FD which gives 7.5% interest and the other is NSC which gives 7.7% interest. If you are asked which one you will invest in, then obviously you will choose the scheme giving 7.7% return after seeing the higher interest because you will feel that if the interest rate is high then the benefit will also be high. But this does not happen. Your return many times depends on whether the interest on your investment is being calculated every quarter or on an annual basis. This is the difference between Post Office FD and NSC. Understand how.

This is how Post Office FD is calculated.

Post Office TD i.e. Post Office FD scheme has a tenure of 5 years. In this, interest is given at the rate of 7.5%. In this scheme, interest is paid annually, but its calculation is done on a quarterly basis. That means if the interest is 7.5%, then it is divided into 4 parts on a quarterly basis. 7.5/4= 1.875% interest is charged on the amount every three months.

In such a situation, the method of calculation will be like this - for example, if you invest Rs 1,00,000 in the scheme, then for the first three months, it will be charged Rs 1,875 interest at the rate of 1.875%. In this way, the amount will become Rs 1,01,875. After the next three months, 1.875% interest will be charged on the entire amount including 1,01,875 interest. In this way, every three months, interest will be charged on the entire amount including interest at the rate of 1.875%. In this way, interest will be charged at the rate of 1.875% 4 times in a year and 20 times in 5 years. In this way, the maturity amount will be Rs 1,44,995 after calculating for 5 years.

This is how the calculation is done in NSC.

If you invest in NSC, then you will be given interest at the rate of 7.7%. This scheme also has a tenure of 5 years. The interest rate is higher than Post Office TD. But in this, interest is calculated on an annual basis. In such a situation, if you invest Rs 1,00,000 in NSC, then interest will be charged at the rate of 7.7% on Rs 1,00,000 in one year. In this way, interest of Rs 7,700 will be charged in one year. In the second year, interest will be charged at the rate of 7.7% on Rs 1,07,700. In this way, the entire amount including principal and interest will be charged interest 5 times in 5 years and the maturity amount will be Rs 1,44,903.

What if 7.7% interest is also available on Post Office FD?

During the calculation, you saw that the amount received in Post Office FD will be Rs 92 more than NSC. This difference is undoubtedly very minor, but it is worth noting that the profit of Post Office TD is more than NSC despite the lower interest rate. On the other hand, if interest of 7.7% was received on a 5-year TD, then the maturity amount would have been Rs 1,46,425. In such a situation, despite having equal tenure and equal interest rate, the profit of Post Office FD would have been Rs 1,522 more than the profit of NSC.

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