Though terrifying to many of us, getting older has its perks: for the most part, nobody tells you what to do, you have your own money to spend, and you get to boss the younger generation around! I’m sure you’ve also heard the saying with great power comes great responsibility; well, earning and having your own money comes with the responsibility to put it to use with care, no matter your age.
This is where fixed deposit accounts with special senior citizen rates come in: you get VIP treatment from banks when it comes to interest rates on your investments! Read on to learn everything you need to know about senior citizen fixed deposit interest rates and why you should consider getting one or at least spreading the word!
Key Takeaways
- Old is gold! What does this mean for fixed deposits in India? Quite literally, senior citizen fixed deposit interest rates are higher when you make investments over the age of 60.
- Generally speaking, FDs are a great investment option for people with low risk appetites who are looking for steady and reliable returns over their investment tenures.
- They are a particularly great fit for people who have retired and are looking to park their savings somewhere safe: senior citizen FDs allow you to earn a regular income – monthly, quarterly, half-yearly, or early – from the interest rates on your investments, offering a great source of supplementary income after retirement.
Features of FD for Senior Citizens
A fixed deposit, simply put, is an investment plan wherein you invest a fixed amount of money for a set amount of time and earn a fixed interest rate. The name makes sense now, doesn’t it? Banks’ interest rates vary based on several factors, from how long you are investing for and which bank you are investing with to your age. No, being 20 or 40 doesn’t change your interest rates, but if you’re over 60, you’re in for a fun little surprise: you qualify for senior citizen FD rates!
FD interest rates for senior citizens are unique – and yes, higher – interest rates offered by Indian banks for people over the age of 60. These senior citizen fixed deposit schemes provide several benefits to senior citizens over and above the higher rates of interest, such as regular payouts from interest earned and loans against the FD, to name a few. Regular payouts from interest earnings, in particular, are an essential benefit of FDs for senior citizens: they allow you to earn or supplement your income after retirement. Like regular FDs, senior citizen fixed deposits also guarantee steady and reliable returns, and some plans even offer tax benefits. It’s a win-win situation all around!
How Is FD Interest Rates for Senior Citizens Calculated?
Fixed deposit rates for senior citizens are calculated like regular FD interest rates only; the only difference is that the highest FD rates apply for senior citizens with most banks. (This is, of course, restricted to Indian banks; there is no guarantee that international banks operating in India offer special FD interest rates for senior citizens.)
Strap in; we’re going to get into the maths of it all now. The time machine is set to 5th grade. Fixed deposit interest rates in India are calculated based on two fundamental principles you are likely already familiar with: simple interest and compound interest. These are the two kinds of interest rate options that FDs may offer you based on their type and terms.
As the name suggests, simple interest calculates interest based on the amount you have invested at the beginning alone. If you’ve invested Rs. 10,000, a simple interest of 10% will get you Rs. 1,000 every year without fail and variation.
On the other hand, compound interest spices things up a bit by allowing you to earn interest on your interest. This means that on that Rs.10,000 investment, both interest rate plans will earn Rs. 1,000 as interest in the first year. However, in the second year, the simple interest investment will still earn you Rs. 1,000 on Rs. 10,000, the compound interest investment will earn interest on the principal amount plus interest earned. Rs. 10,000 + Rs. 1,000 = Rs. 11,000. 10% of Rs, 11,000 is Rs. 1,100. Like magic, your interest earned has gone up!
This variation really adds up over the years, and compound interest can lead to higher and much more lucrative returns, especially when combined with the already higher senior citizen fixed deposit interest rates.
If you’re feeling a scream coming on and are about to start throwing things at us to protect yourself from the horrors of complex maths, hang on a minute! Most banks and other investment institutions offer easy to use calculators that will do this maths for you at a single click – all you need to do is punch the numbers in!
Did You Know?
We all love receiving letters. But that’s not all your local post office is good for! India’s Department of Posts saw a meteoric rise in investments during the lockdown year of 2020 at over two trillion Indian rupees or two lakh crore rupees. They also offer some of the highest fixed deposit interest rates for senior citizens in India based on investment tenure. Here are fixed deposit interest rates for senior citizens in post office:
| Tenure of investment | Post Office FD Rates in 2022 |
| 1 year | 5.50% |
| 2 years | 5.50% |
| 3 years | 5.50% |
You may also opt for their special senior citizens savings scheme, which offers an FD interest rate in post office for senior citizens of 7.40% per annum. It comes with a maturity period of 5 years, and deposits must be made lump sum in one go; the maximum you can deposit is Rs. 15 lakh.
Highest Fixed Deposit Interest Rates for Senior Citizens
The hero of the story: here are the best FD rates for senior citizens offered by Indian banks. For your convenience, we’ve categorised them by rangers provided by major banks and then ranked them by investment tenure to help you choose the right senior citizen fixed deposit scheme for your needs.
| Rank | Bank offering FD | Yearly Interest Range for Senior Citizens |
| 1 | IDFC | From 3.00% to 6.50% |
| 2 | Axis Bank | From 2.50% to 6.50% |
| 3 | HDFC Bank | From 3.00% to 6.35% |
| 4 | State Bank of India | From 3.40% to 6.30% |
| 5 | Bank of Baroda | From 3.30% to 6.25% |
| 6 | Canara Bank | From 2.90% to 6.00% |
| 7 | Punjab and Sind Bank | From 3.50% to 5.80% |
| 8 | Punjab National Bank | From 3.50% to 5.75% |
| 9 | Bank of India | From 3.35% to 5.55% |
These are the highest rate of interest on FD for senior citizens for 1 year investment tenures.
| Rank | Bank Offering FD | Senior Citizen Interest Rate |
| 1 | IDFC | 5.00% |
| 2 | Punjab and Sind Bank | 5.00% |
| 3 | State Bank of India | 4.90% |
| 4 | Canara Bank | 4.90% |
| 5 | Punjab National Bank | 4.90% |
These are best FD rates for senior citizens for 2 year investment tenures.
| Rank | Bank Offering FD | Senior Citizen Interest Rate |
| 1 | Union Bank of India | 5.60% |
| 2 | Canara Bank | 5.60% |
| 3 | IDFC | 5.25% |
These are the highest FD rates for senior citizens for 3 year investment tenures.
| Rank | Bank Offering FD | Senior Citizen Interest Rate |
| 1 | Axis Bank | 5.90% |
| 2 | Punjab and Sind Bank | 5.65% |
| 3 | State Bank of India | 5.60% |
| 4 | IDFC | 5.00% |
These are the best FD rates for senior citizens for 5 year investment tenures.
| Rank | Bank Offering FD | Senior Citizen Interest Rate |
| 1 | Axis Bank | 6.05% |
| 2 | State Bank of India | 5.90% |
| 3 | Union Bank of India | 5.90% |
| 4 | Canara Bank | 5.75% |
| 5 | IDFC | 5.70% |
If you’re looking to avoid paying TDS on fixed deposit for senior citizens, tax saving plans might be what you’re looking for! These banks offer the best tax saving FD interest rates for senior citizens:
| Rank | Bank Offering Tax Saving FD | Senior Citizen Interest Rate |
| 1 | IndusInd Bank | 6.50% |
| 2 | IDFC | 5.80% |
| 3 | Axis Bank | 6.05% |
| 4 | HDFC | 5.85% |
| 5 | Punjab and Sind Bank | 5.80% |
Do You Need Senior Citizen Fixed Deposit?
Senior citizen fixed deposit schemes are a reliable investment option with steady returns and low volatility. They also allow account holders to opt for several different interest payout options: monthly, quarterly, half-yearly, or yearly. This can be immensely valuable if you’re retired and looking for a regular primary or even supplementary income source. Given that opportunities for work change rather drastically after retirement, this can be a much-needed source of financial stability if the investment is made carefully.
How to Invest in FD for Senior Citizen?
Like regular fixed deposits, senior citizen fixed deposits can be opened either online or offline. If you’re planning to open an account with the bank you already have an account with, a few clicks on the online net banking portal will allow you to open your FD and avail of special senior citizen fixed deposit interest rates.
However, if you’ve decided to go for the senior citizen fixed deposit interest rates offered by other banks, you’ll need to be physically present with some documentation: something that proves your age, such as a passport or Aadhaar card, and your PAN card to verify your income status. You’ll also need a photograph to complete your KYC.
Word to Remember
Interest rates: Indian banks really take the saying “old is gold” to a new level. Senior citizens are eligible for, as it says on the tin, senior citizen fixed deposit interest rates, which are significantly higher than those the general public qualifies for. Ka-ching!
Conclusion
Senior citizen fixed deposits are an excellent way for people over the age of 60 – retired people who have worked hard their entire lives and are ready to take a hard-earned and entirely well-deserved break – to invest their money from retirement savings, returns from other investment options, and even pension payouts. This investment will allow them to receive a regular income that earns interest based on special senior citizen fixed deposit interest rates, which are higher and offer steady and stable returns.
FAQs
As the name itself suggests, simply put, senior citizen fixed deposits come with special, higher interest rates that only people over the age of 60 qualify for.
As long as you qualify, i.e., are over the age of 60, this is a fantastic investment option. It offers steady interest returns on your principal investment at pretty lucrative rates. More importantly, this investment is fully protected from market fluctuations, so you never have to worry about those pesky graphs on the news.
Yes. Unless the FD is a special tax-saving one – which comes with a lock-in period of 5 years – interest returns are taxable based on the tax bracket you fall under.
