Senior citizens are the age group of people above 60 years of age. For this segment of the population, one of the most lucrative investments is fixed deposits. The senior citizen Fd rates are different from the usual ones offered by banks. Apart from special senior citizen fixed deposit interest rates, Fds come with other benefits like tax savings, loans and stable returns. These are stress-free ways of investing money for people who are not working and enjoying a retired lifestyle.
Key Takeaways
- Fixed deposits for senior citizens are a profitable investment as senior citizen Fd Rates are higher than that of the general public
- Banks and post offices offer Fds to senior citizens with special senior citizen interest rates
- Fds for senior citizens offer several benefits like tax and loans
Fixed Deposits are one of the most conventional and safest forms of investment. These are investments for assured returns and longer-term security. As the tenure of a fixed deposit is fixed, the interest rates are higher when compared to other deposit schemes offered like recurring deposits.
Fixed deposits offer a fixed rate of interest and the investor knows this at the time of investing the amount. The senior citizen FD interest rates are higher than the ones offered to individuals apart from several other advantages. The FDs are offered by various financial institutions and one must choose carefully before investing. Some of the options available are:
- Banks
- Non-Banking Financial Company
- Post Office
Now let us know in detail about the fixed deposits for senior citizens and also about senior citizen fixed deposit interest rates in banks and Fd for Senior Citizens Pos in detail to help one make an informed decision.
Features of Fixed Deposits for Senior Citizens
The main features of senior citizen fixed deposits are:
- The tenure ranges from 7 days to 20 years for senior citizen Fd
- The senior citizen Fd rates are higher by 0.25% to 0.65% when compared to normal Fds offered to normal public
- Instead of quarterly compounding, there is an option of monthly, bi-annual or annual as well
- For fixed deposits with a tenure of 5 years, taxes can be saved up to Rs. 1.5 lakh under section 80C of the Income Tax Act, 1961
Benefits of Fixed Deposits for Senior Citizens
Before talking about the senior citizen FD rates let us first talk about the benefits this form of investment has to offer for senior citizens. Some of the key benefits are:
- The senior citizen interest rates for fixed deposits are higher which gives a better return on investment
- The money in Fds grows at a steady pace and is safe as well free from market fluctuations. As these offer guaranteed returns and no tracking is needed
- There is very little documentation needed to open an FD. With internet or mobile banking, an FD can be opened online in a few clicks and as all banks already have KYC, no paperwork is needed. This makes it easy for senior citizens.
- The Fds offer a tax benefit as these help in saving tax as they are eligible for deduction under Section 80C of the Income Tax Act
- There is an option to convert these into a monthly income by turning the interest rate earned into monthly income
- The senior citizen interest rate supplements the income of the aged and thus, is helpful for them to manage their expenses without a salary coming in every month
- There are options to choose the frequency of interest payout and the decision is with the senior citizens. They have options like yearly, half-yearly, quarterly or monthly
Who is Eligible for a Senior Citizen Fixed Deposit?
The following is the criteria for opening a senior citizen fixed deposit:
- Resident of India
- NRIs can also open a Fd if they have a NRO or a NRE account
- You must be above 60 years’ old
- Some bank allows retired citizens above the age of 60 to open a Fd but this varies bank to bank
Process to Invest in Senior Citizen FD?
Opening an FD and enjoying senior citizen Fd rates is easy and can be done following a simple process either offline or online.
Offline Mode
The person intending to open an FD must have a document of identity proof, age proof and address proof and visit the nearest bank branch along with passport size photographs. There is a form for opening an FD which needs to be filled in and bank details have to be given for interest payout and depositing money.
Online Mode
Any individual who has a net banking facility can open an FD by logging in to their account. Under the open fixed deposit option, details like tenure, scheme, maturity instructions, options for interest payouts and the bank account to be linked have to be given and the bank will process all details and open the Fd.
Opening Fd for Senior Citizens Pos
Opening a fixed deposit in Post Office is also a great option due to the high fixed deposit interest rates for senior citizens in the Post office. Only one deposit with a minimum amount of Rs. 1000 and a maximum of Rs. 15 lakhs can be opened in a post office. The interest is calculated on the principal amount. The tenure ranges between 7 days to 5 years.
Senior citizen Fd Rates
Following are the senior citizen fixed deposit interest rates offered by various banks:
Bank/Institution | Rate |
Post Office | 5.5-6.7% |
ICICI Bank | 4.5-6.9% |
SBI | 5-6.6% |
HDFC Bank | 4-6.9% |
IDFC Bank | 4.5-8% |
DBS Bank | 4.25% for 1 year |
Punjab Gramin Bank | 4.6% for 1 year |
Union Bank of India | 5% for 1 year |
UCO Bank | 5.35% for 1 year |
Bank of Baroda | 5.4% for 1 year |
Punjab National Bank | 5.5%-5.75% |
Canara Bank | 5.7-6% |
HSBC Bank | 3.6-4.5% |
IndusInd Bank | 3-6.5% |
Fixed Deposit Interest Rates For Senior Citizens In Post Office: Source https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-schemes.aspx
Above are the post office interest Fd interest rate 2021 for senior citizens and also senior citizen fixed deposit interest rates offered by different banks. The rates do not change once the investment is done and this is why fixed deposits are known to be stable and secure.
Before opening a fixed deposit with any financial institution, one must compare the senior citizen Fd rates offered to make sure their money is at the right place.
Did You Know?
We have understood by now that senior citizen interest rates are higher for fixed deposits. But there are some other facts you must know:
- NBFC or company fixed deposits offer higher interest rates but these come with higher risk and thus, a careful decision must be taken.
- On a bank fixed deposit, the interest rate is usually compounded quarterly unless stated otherwise
- Premature withdrawal is charged by most banks and the lock-in for an FD is fixed. Thus, checking all terms and conditions is important before investing.
- TDS is charged on bank fixed deposit interest rates when it exceeds Rs. 10,000 and this income has to be stated in the income tax return.
Word to Remember
Fixed deposits are a lucrative source of investment, especially for senior citizens who do not have a regular source of income and do not have the ability to take a higher risk. Both, Post Office Fd Interest Rate 2021 for Senior Citizens and Senior Citizen Fixed Deposit Interest Rates are higher, but different banks and institutions offer different rates, and thus, a comparison must be done before investing.
Final Thoughts
When we talk of conventional investments, to date, fixed deposits are the preferred choice of many. In urban areas, investments in ULIPs or mutual funds are preferred but still in the lower-income brackets and rural areas, fixed deposits are considered better. This is because of the risk-taking ability and safer options.
Senior citizens prefer fixed deposits for the same reason and also because the Fd rate for senior citizens is higher. The interest rate is usually not valid for short term fixed deposits, but only when the duration is more than a year.
Fixed deposits are safer and better but a comparison must be done before investing to make sure one gets the best returns.
FAQs
Most banks and financial institutions offer higher senior citizen interest rates when compared to any regular fixed deposits.
Under section 80TTB of the Income Tax Act, 1961, interest earned up to Rs. 50000 on a fixed deposit by a senior citizen is tax-free.
Following are the documents accepted as age proof:
PAN Card
Aadhaar Card
Birth certificate
Passport
Matriculation certificate
Senior citizen ID
It is not compulsory to have a savings account to open an FD. The bank where you wish to open an FD account will ask for KYC and open the account.