You probably want to spend your post-retirement years knowing that your needs are taken care of. It is a dream for most people not to be overly dependent on anyone in their golden years. And, of course, having done your share for society, you deserve it. However, you still need to do a few small things to ensure you get what you deserve. Getting yourself a Senior Citizen FD is one of those things you could consider doing. Because they offer decent returns and are relatively risk-free.
Senior Citizen FDs in India 2023
As of 2023, anyone over the age of 60 in India is eligible to create a Senior Citizen Fixed Deposit (FD). Investing in these FDs meant for senior citizens is a way of securing one’s finances post-retirement. FDs are one of the most rewarding and low-risk financial products available. They come with advantages such as regular returns, access to loans, and reductions in tax liability. However, there usually is a minimum lock-in period involved.
Most big banks offer these term deposits for seniors at an exclusive rate of interest.
Benefits of FDs for senior citizens
Invest savings in fixed deposit programs gives senior citizens access to the following advantages:
- Guaranteed returns: Compared to other market-linked products, FDs let senior investors rest assured that their money is safe.
- Fixed interest rates: That means you can relax because you know your money is making money for you. You simply have to wait to collect the assured sum at maturity.
- Better interest rates: Banks usually offer senior citizens higher FD interest rates. That makes these accounts additionally attractive.
- Ease of access: Older people often choose FDs because creating this account requires little documentation. Plus, nowadays, online and mobile banking allows FD account opening in a few clicks. With these options, so long as the bank has an up-to-date KYC, they will require no more proof.
- Flexibility: Senior Citizen FD recipients may earn interest according to their financial needs. They can pick quarterly, annual, semi-annual, or monthly interest distributions to replace pre-retirement income.
- Reduced tax liability: The interest earned from Senior Citizen FDs is tax-free up to ₹50,000 under section 80 TTB of the Income Tax Act of 1961. However, 10% TDS is deducted on payments above ₹50,000. Additionally, irrespective of your age, if you invest in a tax-saving FD, section 80C of the Act lets you deduct up to ₹1.5 lakhs from your net taxable income.
Senior Citizen FD interest rates
According to bankbazaar.com, some of the best Senior Citizen FDs in India, in terms of interest rates, as of February 2023, are as follows.
|Up to 5 years
|Above 5 years
|IDFC First Bank
|4.00% to 8.00%
|4.25% to 7.55%
|Tamilnad Mercantile Bank
|5.25% to 7.50%
|4.25% to 8.35%
|Lakshmi Vilas Bank
|2.50% to 7.00%
|3.75% to 7.75%
|3.00% to 7.75%
|Karur Vysya Bank
|6.90% to 7.65%
|3.75% to 8.50%
|3.50% to 7.50%
|4.00% to 8.25%
What is the eligibility to open a Senior Citizen FD?
You must be a senior Indian citizen or a permanent resident of India to create a senior citizen fixed deposit. To qualify as a senior citizen, the depositor needs to be at least 60 years old.
That said, some banks allow customers over the age of 55 who have opted for voluntary early retirement to open this type of account. Bank policies on this matter are subject to their terms and conditions, so check with your financial institution first.
NRE or NRO account holders over the age of 60, too, can open these accounts.
What documents do you require to open a Senior Citizen FD?
While each bank is likely to have slightly different rules and requirements for a Senior Citizen FD application, many banks tend to ask for the following documents:
- Age proof document
- Passport/Aadhaar Card
- PAN card
What are the features of a Senior Citizen Fixed Deposit?
Senior Citizen FDs are identical to term deposits in terms of their features. A few of the commonly found additional features are:
- There is a fixed term, which lasts anywhere between 1 and 10 years.
- Interest rates depend on the term deposit length. However, tax-saver FDs with a 5-year lock-in period offer senior citizens exceptional interest rates.
- Post-compounding, the interest/maturity value reaches an account of the holder’s choice. Compounding can be done on a monthly/quarterly/annual/semiannual basis.
- Depositors can nominate someone they trust.
- Senior citizens can cancel FDs prematurely at any time. However, tax-saver FDs are the exception to this and may attract a penalty for early withdrawal.
- These plans allow deposits of ₹1 crore or more. Banks may set different limitations.
What are the benefits of Senior Citizen Fixed Deposit?
Opening a fixed deposit as a senior has several advantages. Read on to learn about the most common ones.
- Such FDs offer increased profit potential thanks to their preferential interest rates.
- They help establish a stable environment for funds to expand over time.
- With interest accrued on these savings, account holders can be assured of a steady monthly income through their golden years.
- A Senior Citizen FD may also qualify as a tax saver deposit.
- Senior citizens can choose to get the interest compounded on a monthly, quarterly, semi-annual, or annual basis to their savings account.
The low risk and steady monthly payout associated with FDs make them immensely popular in India. A fixed deposit is an investment where the principal and interest are locked in for a specified period. The account holder can receive interest at regular intervals, such as monthly, quarterly, semiannually, annually, or at the end of the term. Because of all this, FD is an excellent financial tool for the elderly and retired. The additional perk of a Senior Citizen FD in India, of course, is the higher interest rate that banks offer.
Which bank provides the maximum senior citizen FD interest rate?
Interest rates tend to vary with time, so look for the bank offering the highest interest rate at the time of your application. However, while choosing the best bank for a Senior Citizen Fixed Deposit, carefully consider your financial situation and investment goals. You may also want to think about things like ease of access to the money, the application process, etc.
What is the Senior Citizen interest rate offered by post office FD?
The Senior Citizen FD rate in post office accounts is currently 8.3%. However, there is a five-year minimum contract term.
Which FD is best for senior citizen?
The best Fixed Deposit for senior citizens in 2023 depends on their preferences. Options include banks like Suryoday Small Finance Bank offering up to 9.5% interest rates.
What are senior citizen FD rates for 2024?
Senior citizen FD rates for 2024 vary, with options like SBI offering extended deadlines, HDFC Bank providing higher rates, and ICICI Bank’s Golden Years FD offering up to 7.65% interest.
What is the highest fixed deposit interest rates for senior citizens in post office?
The highest fixed deposit interest rate for senior citizens in the post office is 7.50% for a tenure of 5 years, as of December 2023.
What is the interest rate for senior citizen fixed deposit in SBI?
The State Bank of India offers senior citizens an interest rate ranging from 3.50% to 7.60% on fixed deposits, depending on the tenure, as of 2023.