Bank FDs VS Small Savings Schemes: Nowadays, the inflation rate is increasing day by day, due to which many people are now preferring to save for the future of themselves and their family, because they never know when and what emergency will come. In such a situation, people want to keep their money safe and also want good returns. Bank FD and small savings schemes emerge as the two most popular options, but both have their own advantages and limitations, hence people should choose the right option.

The most important thing is that in the April-June 2026 quarter, the government has not made any change in the interest rates of small savings schemes, while the bank FD rates are around 6.25 percent to 6.66 percent, while small savings schemes are still giving returns up to 8.2 percent. In such a situation, the question before investors is whether they should choose FD facility or invest in government schemes for higher returns.

Who is ahead in interest rates?

If we talk about returns, small savings schemes look better than bank FDs, know how?

• Sukanya Samriddhi Yojana: 8.2 percent
• NSC: 7.7 percent
• Kisan Vikas Patra: 7.5 percent
• Monthly Income Plan: 7.4 percent
• PPF: 7.1 percent
• Post Office Saving: 4 percent

If we look at bank FD rates

• SBI, HDFC, ICICI: 6.25 percent
• Kotak Mahindra: 6.50 percent
• Yes Bank: 6.66 percent

Lock-in and Liquidity

Let us tell you that bank FDs are more flexible. You can invest for more or less time and can also withdraw money when needed (with penalty). If we talk about small savings schemes then there is more lock-in in it.

• NSC: 5 years
• PPF: 15 years
• Sukanya Yojana: Long term (up to the age of the daughter)

Therefore these plans are better for long term goals.

Whose benefit in tax?

Tax exemption up to Rs 1.5 lakh is available under Section 80C on investing in small savings schemes. In some schemes, tax exemption is also available on interest. On the other hand, the interest on bank FD is fully taxable, which may reduce the actual returns.

Who is safer?

Both options are considered safe. Small savings schemes are backed by the government, whereas bank FDs are also safe in big banks. Therefore both are reliable in terms of risk.

Is it right to invest in both?

Experts believe that instead of choosing just one option, it is better to invest in both. With this, you can get more returns and tax benefits from liquidity and small savings schemes from FD.