Post Office vs SBI Savings Account: Which One Offers Better Interest Rates and Benefits?

When it comes to safe and reliable savings options, two names that instantly come to mind are the Post Office and State Bank of India (SBI). Both are trusted institutions backed by the Government of India, offering secure savings options to millions of account holders. However, many people often wonder — which savings account gives higher interest and better benefits?

If you’re also confused about whether to open your account in the Post Office or in SBI, this detailed comparison will help you decide which option is more rewarding and suitable for your financial needs.

1. Interest Rates: Post Office Leads with Higher Returns

One of the most significant differences between the two lies in the interest rate.

• Post Office Savings Account (POSA): Currently, the Post Office offers a 4% annual interest rate on all account balances. This rate is higher than most major banks, making it a better choice for those seeking stable returns without market risks.

  The Ministry of Finance reviews the Post Office savings interest rates every quarter. As per the latest review held on 30 September 2025, the government has decided to keep the rate unchanged for the October–December quarter of FY 2025–26.

• SBI Savings Account: On the other hand, the State Bank of India (SBI) offers 2.5% interest per annum on its savings accounts. The same rate applies across all account types and is calculated on a quarterly basis.

  In fact, other large banks like HDFC Bank and ICICI Bank also offer the same 2.5% annual return, which means Post Office accounts continue to hold an edge in terms of higher interest earnings.

2. How Interest Is Calculated

The Post Office uses a simple and transparent interest calculation method.
Interest is computed based on the minimum balance between the 10th and the last day of each month, and the total interest is credited annually at the end of the financial year.

If you close your Post Office account before the year ends, interest will be paid up to the last completed month.

In contrast, SBI calculates interest on the daily balance but credits it quarterly, allowing customers to receive interest payouts every three months. This quarterly credit cycle adds flexibility for those who prefer more frequent income from their savings.

3. Tax Benefits: Both Offer the Same Advantage

Both Post Office and SBI savings accounts are eligible for tax deductions under Section 80TTA of the Income Tax Act, 1961.

Under this provision:

• Individuals and Hindu Undivided Families (HUFs) can claim up to ₹10,000 per financial year as a tax exemption on the interest earned from their savings accounts.

• This benefit applies uniformly across banks, post offices, and cooperative societies.

Thus, when it comes to taxation, there is no difference between SBI and Post Office accounts.

4. Additional Features and Convenience

While the Post Office Savings Account offers higher interest rates, it lacks some of the modern conveniences available in bank accounts.

• SBI provides robust digital banking services, including mobile banking, internet banking, debit cards, ATMs, and seamless UPI integration — allowing users to access and manage their funds anytime, anywhere.

• Post Office accounts, although secure and government-backed, still have limited digital capabilities and may require customers to visit branches for several transactions.

So, if accessibility and digital ease are your top priorities, SBI clearly has an advantage.

5. Which Savings Account Should You Choose?

Here’s a quick summary to help you decide:

Feature Post Office Savings Account SBI Savings Account

Interest Rate	4% per annum	2.5% per annum
Interest Credit	Annually	Quarterly
Tax Benefit (u/s 80TTA)	Up to ₹10,000	Up to ₹10,000
Digital Banking	Limited	Excellent (Mobile, NetBanking, UPI)
Safety	Government-backed	Government-backed
Best For	High returns and traditional savers	Easy access and digital convenience

6. Final Verdict

If your goal is maximum interest with guaranteed safety, the Post Office Savings Account is the better choice, offering 4% annual returns — higher than SBI and other major banks.

However, if you value convenience, online accessibility, and regular interest credit, SBI’s savings account may be more practical for your daily banking needs.

Ultimately, your choice depends on your priorities — whether you want higher returns or seamless digital access.

For many smart savers, maintaining both accounts can be an excellent strategy — using SBI for transactions and Post Office for stable savings growth.