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5 Best Fixed Deposits For Senior Citizens With Good Returns Up To 7.50%

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A Fixed Deposit (FD) is one of the most traditional financial instruments for senior citizens to save for their retirement. They tend to deposit a substantial portion of their money in bank FDs because, relative to investments in equity or mutual funds, the principal amount that is invested is deemed better and the former often provides guaranteed returns. Some characteristics of fixed deposits for senior citizens are provided below:

Opening of an FD account
 

Opening of an FD account

Having a regular savings account with the bank, senior citizens generally open an FD account with the same bank. In case they do not have a savings account with the bank, he or she will be mandated to go through complete KYC procedure. You will be asked to submit, along with the properly completed KYC form, a self-attested copy of identity (ID) proof, address proof, and passport size color photographs. As the bank official will ask for them for authentication purposes, you will have to carry original documents too with you. Bank officials can check your age from the documents submitted by you in order to be able to invest in FDs as a senior citizen. Typically, as stated in the Income Tax Act, the bank meets the classification of a senior citizen.

Minimum and maximum deposit limit

Minimum and maximum deposit limit

The minimum deposit amount in an FD account varies between banks. But there is no upper limit for the general public as well as senior citizens to deposit.

Tenure

Tenure

In order to open an FD account with them banks generally have specified the minimum and maximum tenure. Currently, for a minimum of 7 days and up to a limit of 10 years, one can invest in an FD. The tenure can be preferred according to your requirements within this set.

Tax deductions
 

Tax deductions

As per the recently added section 80TTB of the Income Tax Act, interest on deposits maintained with banks, or post offices earned up to Rs 50,000 is exempted from tax. This tax deduction operates as follows: a senior citizen can seek an exemption of interest income received by these institutions of up to Rs 50,000 as a post-tax deduction from gross total income. In addition, no TDS will be withheld from interest payments made in a single financial year of up to Rs 50,000. A senior citizen can submit Form-15H to the bank to avoid TDS.

Premature withdrawal facility

Premature withdrawal facility

FDs typically have a premature withdrawal facility that can support you fulfill emergency needs. That being said, the bank can levy a penalty on the premature withdrawal of the FD and thus the penalty amount varies through banks. Some banks do not impose a penalty on early withdrawals presently. In addition, without a premature withdrawal facility, some banks often offer FDs. It is also prudent to review the laws surrounding the same matter.

Nomination facility

Nomination facility

FDs also support senior citizens with a nomination facility. It is vital that you identify the nominee in a straightforward and correct way while opening an FD account. A separate form, known as Form DA1, has to be fulfilled correctly during nomination so that your legitimate successors do not have to go through challenges to receive the fund.

Interest rates

In contrast to the general public, senior citizens are usually granted higher interest rates. Banks usually pay a higher interest rate of 0.50 percent. Elderly people can opt whether to earn monthly interest payments (non-cumulative option) to cover their expenditures or, including the principal amount, at the time of maturity (cumulative).

1 Year FD Rates For Senior Citizens

1 Year FD Rates For Senior Citizens

Banks ROI in %
Equitas Small Finance Bank 7.10
IndusInd Bank 7.00
RBL Bank 7.00
Ujjivan Small Finance Bank 7.00
DCB Bank 6.75

2 Year FD Rates For Senior Citizens

Banks ROI in %
Equitas Small Finance Bank 7.25
AU Small Finance Bank 7.00
DCB Bank 7.00
IndusInd Bank 7.00
RBL Bank 7.00

3 Year FD Rates For Senior Citizens

Banks ROI in %
Equitas Small Finance Bank 7.50
AU Small Finance Bank 7.25
DCB Bank 7.25
RBL Bank 7.25
IndusInd Bank 7.00

5 Year FD Rates For Senior Citizens

Banks ROI in %
DCB Bank 7.25
Equitas Small Finance Bank 7.25
AU Small Finance Bank 7.00
IndusInd Bank 7.00
RBL Bank 6.90
Read more about: fds fixed deposits
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