A Look At Post Office Interest Rates Which have Been Cut With Effect From April 1, 2016

Post office interest rates have been slashed with effect from April 1, 2016. Take a look at interest rates on PPF, Sukanya Samriddhi, KVP, NSC, Senior Citizens Savings schemes and various time deposits of the post office.The government will now review the post office interest rates every quarter, as against the annual review. This is likely to lead to an alignment of interest rates to market related interest rates. The rates will be reviewed against the g-sec rates. Today, you are getting an interest rate of 8.7% for the PPF. However, from April 1, 2016 until June 30, you will receive only 8.1%. Thereafter, the interest rates would be reviewed every quarter.This is a huge disappointment for one of the countrys most popular tax saving scheme. Investors, who like to place money for the long term in the ever secure NSC, should be disgruntled.Interest rates on the NSC has been cut to 8.1% from 8.5% from April 1, 2016. At least there is tax savings under Sec 80C which has been retained. The government has decided not to spare senior citizens as well. The 5 year senior citizen scheme will see an interest rate of 9.3% from 8.6%We hope that it does not fall further when the government reviews interest rate again in the next quarter. At least senior citizens should get some respite. Interest rate on the Sukanya Samriddhi Account Scheme Interest will be just 8.6% from the current 9.2%.How far will it affect fresh investments into the scheme, remains to be seen. Sec 80C tax benefits have been retained. From April 1, 2016, you would get interest rate of 7.8 per cent, as against 8.4 per cent.A lot of retired persons, who depended on this monthly income scheme, may find their income falling. Hope the government was a little more considerate on select schemes. The 5-year recurring deposit has been the hardest hit. The cut is a full 1 per cent from 8.4 per cent to 7.4 per cent.This is even worse than the interest rate offered by top banks in the country. Better to place money in bank recurring deposit schemes. With effect from April 1, 2016 you would get just 7.1 per cent for a 1 year time deposit at the post office, as against 8.4% currently. You are better off placing money in a bank, where you can get interest rates of as much as 8 per cent. A 2 year post office time deposit will fetch you an interest rate of 7.2 per cent as against 8.4 per cent currently. You are better off placing money in select other bank deposits, where you get significantly higher interest rates.