Post Office Time Deposits: Should you invest?

Interest rates are going up, but the fixed deposits have been slow to catch up. The central government recently announced a hike of up to 30 basis points in interest rates on Post Office Time Deposits (POTD).

POTD are backed by the sovereign and hence carry almost no credit risk. They are issued for a term of one, two, three and five years and offer interest rates of up to 6.7 percent. The interest is paid annually and taxable in the hands of the investor. POTD can be opened in single name or jointly with minimum investments of Rs 1,000.