Time deposits such as Fixed and Recurring Deposit accounts are good saving instruments that have little to no risk. They are designed to bring financial relief to many people. This is because these saving instruments are not meant to be tax-saving tools. These are primarily designed for the purpose of providing financial security. Both earning youngsters and retired senior citizens can take advantage of such investment and savings options.
Senior Citizens FD Rates
Fixed deposits for senior citizens are essentially the same as regular fixed deposits. The points of difference are usually that Senior Citizen FDs offer better interest rates and have some limitations on their tenure. Senior citizen fixed deposit can also be an additional source of income for many retired individuals if managed properly.
Bank FD Rates For Senior Citizens | ||
| Bank Name | Tenure | Senior Citizen FD Interest Rates (up to Rs. 2 crore) |
| IDFC First Bank | 7 days – 10 years | 4.50% to 8.75% p.a. |
| DBS Bank | 7 days – 5 years and above | 4.00% to 7.00% p.a. |
| Yes Bank | 7 days – 10 years | 5.50% to 7.75% p.a. |
| Kotak Mahindra Bank | 7 days – 10 years | 4.00% to 7.30% p.a. |
| IndusInd Bank | 7 days – 61 months and above | 3.75% to 7.50% p.a. |
| Axis Bank | 7 days – 10 years | 3.50% to 7.25% p.a. |
| Punjab National Bank | 7 days – 5 years | 6.25% to 6.75% p.a. |
| SBI Bank | 7 days – 10 years | 5.00% to 6.60% p.a. |
| Standard Chartered Bank | 7 days – 10 years | 4.25% to 7.00% p.a. |
| Citibank | 7 days – >=1096 days | 3.50% to 6.50% p.a. |
Note: The above mentioned FD Rates are applicable with effect from 10th January 2020.
How to Open a Senior Citizen Fixed Deposit Account?
All-time deposits made by senior citizens come under the Senior Citizens Savings Scheme (SCSS). To open a senior citizen Fixed deposit account in a post office, depositors have to visit the post office and fill the relevant FD form to open an account. They also need to deposit the investment amount either through cheque or demand draft.
Depositors can open an FD account in banks as well. Most banks accept online form submissions where individuals can fill and submit their FD account opening form online. The amount of the deposit is usually deducted from the applicant’s preferred savings bank account. Senior citizens can also choose how they wish to receive interest. It can be credited monthly, quarterly, or annually.
Eligibility for Senior Citizen Fixed Deposit
All the resident and NRI senior citizens above the age of 60 years are eligible for fixed deposit schemes offered by the banks and post offices. NRI senior citizens can open a fixed deposit under the non-resident external (NRE) and non-resident Ordinary (NRO) category.
Features of Senior Citizen FD
The features of senior citizen FD are quite similar to traditional FDs except for some unique features. Some of the features of senior citizen FDs are listed here:
- The tenure of FDs for senior citizens is quite flexible as it starts from a period of 5 years and can go up to 10 years. The exact tenure of the deposit depends on the bank or post office rules and regulations.
- Senior Citizen FDs also come with a nomination facility in which the depositor can nominate their spouse or children for the maturity amount. In the case of early death in specific conditions or at the time of maturity the amount is disbursed in the multiples of Rs. 50.
- The interest rates offered in senior Citizen FDs are usually higher than the traditional savings instruments but these are also term and amount specific. A longer tenure means that the depositor will get increased returns in the form of interest even if the interest rates are not too high.
- The interest from a senior citizen FD is calculated at a compounding rate and it can be added to the maturity value or credited to the savings bank account of the depositor. Compound interest also means that the maturity value would be higher than expected. Some banks also offer 0.5% higher interest rates to the resident senior citizens. However, such increased interest rates are subject to a few additional conditions that are subject to particular banks’ policies. The increased rates of interest and conditions can change as per the bank as well. In addition, such special interest rates are not applicable if the amount of investment exceeds the limit of Rs. 1 crore.
As per current trends, interest rates offered to senior citizens go up to a maximum of 8% on time deposits made in banks. However, the deposit must be made for a period of 10 years and the deposit amount cannot exceed the limit of Rs. 7.5 lakh. According to Senior Citizen Savings Scheme (SCSS), time deposits up to a maximum limit of Rs. 15 lakh made in post offices will get interest rates of 8.5% with a maturity period of 5 years.
- Premature withdrawal is also available in a Senior Citizen Fixed Deposit but it will not contain the full maturity amount. Many other tax-saving instruments do not offer such facilities as these attract many penalties. Some of the tax-saving instruments may even call-off the entire tax-saving part if the depositor withdraws the amount prematurely.
- There is no specified upper limit to the amount invested in senior citizen FDs. This gives a good opportunity to the depositors as they can also invest their life-savings and expect good returns at maturity. However, in practice, the upper limit of a senior citizen FD largely depends on the financial institution from where you are opening the account.
- A major benefit offered by Senior Citizen Fixed Deposit is that it offers a safe place where you can invest your money to let it grow at a steady pace. This is because FD offers guaranteed returns. And this return is unaffected by market dynamics and many other factors that influence other investments. In the end, you will get interest on your own savings which is significantly beneficial.