Investment in secure financial instruments becomes very necessary as one retires from employment or merely ventures into its later years. For elderly people who have poor or erratic income, fixed deposits tend to be a safe option. Many banks and also non-bank financial companies or NBFCs, provide senior citizens with higher FD rates at an additional rate of 0.25 per cent - 1.00 per cent (approximately). Below are the 5 best fixed deposits for senior citizens for a tenure of 1-2 year.
Key things to consider about Senior Citizen FD schemes
The below-listed points illustrate the characteristics of fixed deposit schemes for senior citizens proposed by different banks:
- Senior Citizen FD schemes come with a tenure ranging from 7 days to 10/20 years.
- Compared to the general public, senior citizens are provided with higher interest rates ranging from 0.25% to 0.65%.
- Some banks provide interest on a monthly, annual or semi-annual basis, whereas most of the banks calculate interest on a quarterly basis for seniors.
- Senior citizens are allowed to claim deductions for up to Rs. 1.5 lakh under section 80C, if they deposit for a period of 5 years.
- Some banks deem those citizens to be elderly people who are 60 years of age or more.
- Super senior citizens are also considered by some of the banks. Those are the ones who have surpassed the 80-year age cap. They are provided above the rates offered to senior citizens with additional fixed deposit interest rates.
1 Year FDs For Senior Citizens
Banks ROI in % IndusInd Bank 7.5 RBL Bank 7.25 DCB Bank 7 Yes Bank 7 Bandhan Bank 6.5
2 Year FDs For Senior Citizens
Banks ROI in % IndusInd Bank 7.5 RBL Bank 7.25 DCB Bank 7.15 AU Small Finance Bank 7 Ujjivan Small Finance Bank 7
How to apply for a senior citizen fixed deposit scheme?
- Depositors have to visit the post office and fill in the required FD form in order to open a senior citizen fixed deposit account in a post office. Either by cheque or demand draft, they will have to deposit the investment amount.
- In banks, depositors can also open an FD account. Many banks offer digital form applications where people can apply and submit their online FD account opening form. The minimum deposit amount is generally withdrawn from the chosen savings bank account of the investor.
- Elderly people can also prefer how the interest they want to be received or credited in their account i.e. on a monthly, quarterly, or annually basis.
Documents required to open a senior citizen fixed deposit account
To effectively open a fixed deposit account at any bank or non-banking financial companies (NBFC), the following list of documents will be required by senior citizens:
- Age proof: PAN Card, Aadhaar card
- Identity proof: Passport and Voter ID Card
- Residence proof: Passport, Aadhaar card, utility bills of last 3 months
- PAN Card or Form 60
- Form 15H
TDS applicable on senior citizen fixed deposit schemes
In the field of fixed deposits, banks and NBFCs subtract tax from the accumulated interest before being credited to the account of the investor. TDS is levied as the interest accrues, i.e. monthly, quarterly, half-yearly or annually, in the case of cumulative interest payout. Tax is withheld on the received interest for senior citizens @ 10 per cent when the interest surpasses Rs. 50,000 as compared to Rs. 40,000 for the general public.