Senior citizens are usually people who are above 60 years of age. Banks recommend senior citizen fixed deposits to elderly citizens who are nearing retirement or are already retired. With FDs, they not only get better security but are also able to have peace of mind knowing they have chosen a safe investment option. For them, FDs are beneficial despite highs and lows in the market.
So, let’s look at what a senior citizen FD is, how you can open a senior citizen fixed deposit account, and the top banks offering the same.
What Does a Senior Citizen FD Mean?
Senior citizen FDs are a great investment option for senior citizens who want to increase their wealth and save money on taxes. Senior citizens have a lot of spare time because they do not have much responsibility in terms of work or family responsibilities. Therefore, it makes sense for them to invest their time in saving money through FDs.
The senior citizen fixed deposit interest rates are higher than standard fixed deposit rates. It is known as one of the most beneficial financial sources for senior citizens having irregular or low incomes. The senior citizen fixed deposit interest rates range from 8% to 15% per annum, depending on the bank offering these deposits and the tenure chosen by an investor for opening his/her account with that particular bank.
Is Senior Citizen FD a Good Investment?
Offering stability and security, a senior citizen fixed deposit is an investment any elderly can go for with closed eyes. Here are a few reasons why:
A senior citizen FD can be opened in a bank or post office. It’s not necessary to go through brokers or agents as you would need to open other types of investments like equity mutual funds.
The interest rate on senior citizen FDs is higher than what you’d get on other short-term deposits like savings bank accounts, cash credit limit (CCL), overdrafts and current accounts. This is because banks have to pay a higher rate of interest on these deposits by law.
Senior citizen fixed deposits are eligible for tax deductions under Section 80C of the Income Tax Act 1961. They are also one of the most popular investment options among retired people who want to save tax while earning some interest at the same time.
Benefits and Key Features of Senior Citizen FD
Senior Citizen Fixed Deposits are designed for people above the age of 60 years. These deposits offer a higher interest rate and longer tenure compared to regular savings accounts.
If you are 60 or above and are considering opening a senior citizen fixed deposit, then take a look at the key features and advantages below:
Higher Interest Rates: Senior Citizen Fixed Deposits offer higher interest rates than regular savings bank accounts. The exact interest rate that you get on your deposit depends on various factors such as the amount you deposit, tenure, and even the bank to which you open your account. Overall, though, senior citizens tend to get more competitive rates than other sections of society.
Longer Tenure: Some banks offer a maximum tenure of 5 years while others offer 10 years. However, there are also banks that allow an even longer tenure of 15 years!
You may also love to read about – FD premature withdrawal penalty calculator
What is the Process of Opening a Senior Citizen FD?
Senior Citizen FDs are opened by senior citizens. They are meant for people who are above 60 years of age. Senior citizens can get tax benefits when they invest in these schemes. These plans also offer a higher interest rate than other types of fixed deposits.
Opening a Senior Citizen FD is not very difficult. The procedure of opening a senior citizen FD involves visiting the nearest bank. The depositor has to fill out the required application form for opening the account. Additionally, they need to submit a deposit amount via cheque or demand draft.
