Post Office FD Extension: See How Rs 6 Lakh Can Grow To Rs 18.29 Lakh

The Post Office Time Deposit (TD) scheme, commonly known as the Post Office FD , offers secure and attractive returns for investors looking for guaranteed growth. This government-backed investment scheme allows individuals to choose from 1-, 2-, 3-, and 5-year deposit periods. With no maximum limit on investment, these FDs are suitable for both individual and joint account holders. The interest is payable annually but calculated quarterly, ensuring that the returns are compounded regularly for the benefit of investors.

Flexible Investment Options with Guaranteed Returns
Post Office FDs are designed to cater to various investment needs. Whether you're a new investor or looking to diversify your portfolio, this scheme offers peace of mind with competitive interest rates. Below are the interest rates for each deposit term:

• 1-year FD: 6.9%
  
• 2-year FD: 7.0%
  
• 3-year FD: 7.1%
  
• 5-year FD: 7.5%
  

In addition to these attractive returns, the Post Office FD also provides tax benefits, especially with the 5-year FD. Deposits up to ₹1.5 lakh in a financial year are eligible for deductions under Section 80C of the Income Tax Act, making it an excellent choice for those looking to reduce their taxable income.

Post Office FD Extension: Maximise Your Investment
One of the key advantages of Post Office FDs is the extension facility. When an FD reaches maturity, investors can extend the account for an additional tenure, continuing to earn the same interest rate applicable at the time of maturity. This extension can be done at different intervals depending on the term of the FD:

• 1-year FD: Extension can be done within 6 months of maturity.
  
• 2-year FD: Extension allowed within 12 months.
  
• 3- and 5-year FD: Extension possible within 18 months of maturity.
  

The benefit of extending an FD is that it keeps your funds growing without any interruption in returns. The interest rate applicable on the day of maturity will remain valid for the entire extended period.

How Does FD Extension Work?
When you open a Post Office FD, you have the option to request an extension at the time of account opening. If you choose to extend the FD after its maturity, the same process applies. Extensions can be made for any number of terms, giving you flexibility in how long you want to continue your investment. This makes the Post Office FD an excellent long-term investment vehicle for those who want to build wealth steadily over time.

Premature Withdrawal and Its Impact on Returns
While extending your FD is an easy process, it's important to understand the rules regarding premature withdrawals. If you close your FD before its completion, the interest rate applicable will be lower than the contracted rate. For example, if you close a 2-, 3-, or 5-year FD after one year, the rate will be reduced by 2% for the completed period, and the savings account interest will apply for the part of the term less than a year. The rule for premature closure within the first 6 months is stricter, as no withdrawal is allowed during this period.

Example: Maximising Returns with FD Extensions
Consider an investment of ₹6 lakh in a 5-year FD. On maturity, the total amount could grow to ₹8.69 lakh, with ₹2.69 lakh earned as interest. If you choose to extend the FD for another 5 years, the maturity amount will increase further. By the end of the second extension (10 years), the maturity amount could reach ₹12.61 lakh. After 15 years, with a third extension, the total could rise to ₹18.29 lakh. This example highlights how powerful the Post Office FD extension facility can be in growing your investment over the long term.

Post Office FDs are not just about guaranteed returns but also offer flexibility through the extension option. Whether you're investing for a short period or want to build wealth over a long time, this scheme can cater to your needs while offering tax-saving benefits. With its simple and convenient extension rules, the Post Office FD is an excellent choice for anyone looking to ensure steady growth and secure returns.

Investors should always consider their financial goals and liquidity requirements before committing to a Post Office FD. Extending your FD could be an ideal strategy to maximise your returns and secure your financial future.

Key Takeaways

• Post Office FDs offer competitive interest rates with guaranteed returns for 1-, 2-, 3-, and 5-year periods.
  
• Extension options allow you to continue earning the same interest rate post-maturity.
  
• Tax benefits are available under Section 80C for 5-year FDs.
  
• Premature closure reduces interest rates, so extensions may be a better option for long-term growth.
  

For more information, always ensure you read the terms and conditions on the official Post Office website or consult a financial advisor.