Public Provident Fund vs Bank Intrest Rate

Comparing their features is important when deciding between a Public Provident Fund (PPF) and a Bank Account (Savings or Fixed Deposit). Use tools like JezzMoney PPF Calculator to estimate your returns before investing.

1. Interest Rates

  • PPF: Around 7.1% (compounded annually), set by the government.
  • Bank Savings Account: Typically 2.5%–4% (varies by bank).
  • Bank Fixed Deposit (FD): Around 5%–7% (varies by tenure and bank).

2. Risk & Security

  • PPF: 100% risk-free; backed by the government.
  • Bank Savings/FD: Safe but subject to bank performance and RBI insurance limit (₹5 lakh per account holder).

3. Tax Benefits

  • PPF: Triple tax exemption (EEE) – Investment, interest, and withdrawal are all tax-free under Section 80C.
  • Bank Savings: Interest above ₹10,000 is taxable.
  • Bank FD: Interest is taxable, but you get ₹1.5 lakh deduction under 80C for 5-year FDs.

4. Lock-in Period

  • PPF: 15 years (partial withdrawal from the 7th year).
  • Bank Savings: No lock-in; can withdraw anytime.
  • Bank FD: Fixed tenure (7 days to 10 years).

5. Liquidity

  • PPF: Low liquidity; partial withdrawal after 7 years or loan facility available.
  • Bank Savings: High liquidity; withdraw anytime.
  • Bank FD: Moderate liquidity; penalty on premature withdrawal.

6. Investment Limit

  • PPF: ₹500 to ₹1.5 lakh per year.
  • Bank Savings: No limit.
  • Bank FD: No limit.

7. Who Should Choose What?

  • Choose PPF if You want long-term, risk-free savings with tax benefits.
  • Choose a Bank Savings Account if You need easy access to money for daily expenses.
  • Choose a Bank FD if You want higher returns than a savings account but with some lock-in period.

Final Verdict

  • For long-term wealth & tax-free returnsPPF is better.
  • For liquidity & flexibility, → Bank Account (Savings/FD) is better.

To see how much you can earn, try the JezzMoney PPF Calculator, which provides accurate projections! Would you like help in planning your investments further? Contact us with our MF advisor.

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