How is PPF interest not calculated

How is interest calculated on a PPF account ? This has been a mystery and if you google you will find all kind of answers and based on the answers, people try to find the most efficient way to use their PPF account

A couple of ways in which PPF interest is not calculated

• It is not compounded monthly
• It is not calculated only in the month of March

Here is my take ,
Interest in a PPF account is calculated each month . Please note the stress is on calculated not credited .

Each month the least amount in the account between the 5th and the last day of the month is used for calculating the interest and 12 such calculations are done and finally in the month of March , the 12 interests are added together and  credited as interest for the year.

This is something unique ,

• This is not monthly compounding, though interest calculated so, as the interest amount is still not credited hence not considered for the next month's interest calculations
• Neither is the interest calculated only in the month of March , though interest is credited in March .

This means if you think crediting your money in March, is the best way to do so ... you are wrong , as in that case your would earn interest only for the month of March

You want to take full advantage of the PPF interest calculation ? then, deposit as much as you can in the month of April and if you can , before 5th of April ...that would be a smart move

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