SSY vs FD: Sukanya Samriddhi Yojana or Bank FD? Where should you deposit money in your daughter's name to get the highest returns?

SSY vs. Fixed Deposit Comparison: Every parent saves a portion of their hard-earned money for their children's future. They aim to invest these funds where the capital remains completely secure while yielding excellent returns. Parents often face a dilemma, especially when planning for a daughter's future—such as her higher education or wedding expenses.

The key question before them is whether to open a bank Fixed Deposit (FD) in their daughter's name or invest in the government-backed Sukanya Samriddhi Yojana (SSY). Let us examine the nuances, interest rates, and tax rules of both schemes to determine which investment option is more beneficial for you.

1. Sukanya Samriddhi Yojana (SSY): A Secure and Special Option for Daughters

Operated by the Post Office, the Sukanya Samriddhi Yojana is designed exclusively for daughters. It is a completely risk-free scheme, as the Government of India itself guarantees the safety of the deposited funds. For the April-June quarter of the current financial year (2026-27), the government is offering an annual compound interest rate of 8.2% on this scheme.

Parents or legal guardians can open this account before their daughter turns 10 years old. Investments can range from a minimum of ₹250 to a maximum of ₹1.5 lakh per financial year. Contributions need to be made for only 15 years, while the scheme matures 21 years from the date of account opening.

The most significant feature of this scheme is its 'EEE' status. Investments qualify for a deduction under Section 80C of the Income Tax Act, the annual interest earned is entirely tax-free, and the entire maturity amount is also exempt from tax. Calculator: How your daughter can accumulate around ₹72 lakh

The math behind building a substantial corpus of ₹72 lakh through the Sukanya Samriddhi Yojana is quite simple. To achieve this, you need to invest ₹12,500 per month—or a maximum of ₹1.50 lakh annually—into your daughter's account.

If you open this account when your daughter is one year old, your total investment over 15 years will amount to ₹22,50,000. Based on the current interest rate of 8.2%, she will receive a total of ₹71,82,119 upon maturity when she turns 21. In this corpus, the interest component alone—excluding your principal deposits—will amount to ₹49,32,119.

2. Fixed Deposit (FD): A flexible option for both boys and girls

Unlike the Sukanya Samriddhi Yojana, bank FD schemes do not have gender-based restrictions; they are available for both sons and daughters. Many banks also run special FD schemes aimed at building a substantial lump-sum corpus for a child's bright future, offering higher interest rates than standard FDs.

Currently, many banks are offering interest rates of 8% or higher on children's FDs. For instance, Yes Bank offers an attractive interest rate of up to 8% to general customers on FDs opened in a child's name for tenures ranging from 7 days to 10 years (on select tenures).

Similarly, Punjab National Bank's (PNB) 'Beti Ki Shiksha Yojana' is an excellent example of a scheme specifically designed to cover the educational expenses of eligible female students attending government schools.

However, FDs do not offer the same tax benefits as the Sukanya Samriddhi Yojana. Except for 5-year tax-saver FDs, the interest earned on other FDs is fully taxable and is taxed according to the investor's applicable tax slab.

Which scheme is best for you?