Have you wondered what senior citizens fixed deposits (FD) are? Fixed deposits are often regarded as a great investment option for younger adults, but they can also be great for senior citizens. An Indian resident aged 60 years and above can open a FD account that is meant for senior citizens.
These investment options are used by the elders to invest their hard-earned savings in safer avenues, which also provide them with decent returns. These FDs are also beneficial in earning regular income through interest payouts. Although they are similar to the regular FDs, they provide added benefits to the senior citizens. .
Features
Any Indian resident aged 60 years and above can avail senior citizen term deposits. Some of the features are listed below:
- Tenure can be from 7 days up to 10 years depending on the bank. Banks offer attractive interest rates for senior investors who choose to open such deposit accounts
- Account holders can declare any person as a nominee on these accounts. Leading banks offer greater flexibility by allowing seniors to open joint FDs with another individual who is not a senior
- Interest rates are dependent on the tenure of the
- The interest is calculated on the basis of quarterly compounding. Account holders can choose to credit the interest to their designated bank account or can receive the entire cumulative sum on maturity
- These FDs can be closed before the maturity date; however, premature withdrawal may attract certain penalties
- Some of these FDs can be tax saving schemes that have a lock-in period of 5 years and also provide special interest rates for senior investors
Interest Rates
Almost every bank in the country offers high senior citizen term deposit rates. These can be as much as 0.5% higher than the prescribed rates. However, you need to understand that the high rate is available only if certain terms and conditions are met. Hence, it is recommended that you check with your bank before opening the FD account.
The special interest rate is also generally not available for deposits exceeding INR 1 crore. Moreover, senior FDs for NRE, FCNR and NRO do not offer the higher interest rate. In all these instances, the interest rates remain the same for all classes of the investors.
Interest on senior citizen FDs may attract tax liabilities based on regulations, as per the Income Tax Act. Often, such taxes are deducted at source; however, you can avoid the payment of these taxes by submitting form 15G or 15H to the bank.
Benefits
There are certain benefits for investors who apply for senior citizen term deposits.
- With the special interest rates, investors are able to earn higher returns on investments
- Provides elders a safe investment option for earning returns at a steady rate
- Interest on these FDs can be converted to monthly income, which provides financial stability during retirement years
- Using tax saver term deposit plans, investors can enjoy benefits under Section 80C of the Income Tax Act
Once you have a better understanding of senior FDs, decide on whether this investment tool suits your requirements and consider opening an account today. Senior citizen term deposits offer a simple solution to safeguard your wealth during your days of retirement, so it is best to begin investing in this avenue early. The earlier you invest, the better the returns that you will enjoy, when you need them most.
Author Box:
Tejas Kunder is an independent blogger and writing has been his passion for a long time. A journalism grad, he loves exploring the world of sports, health, lifestyle and travel. When he’s not writing, he’s out on his bike discovering new places, apart from that he loves listening to music and catching up on the latest flick.
