For senior citizen population, safety and liquidity are the two look outs apart from getting regular income options. And many retired folks don't prefer experimenting with their hard earned money and put their money in medium to long term fixed deposits depending on their requirement of funds.
Now, interesting even as the interest rates may be revised upwards in not so distant future, currently the interest rates on FDs are not very lucrative so it shall be best to park them not for a longer tenure. In fact considering the inflation, the real return from most of the fixed deposit instruments have turned to be negative.
Also,given the current scale of Covid 19 spread, some of the banks have extended the special fixed deposit scheme for senior citizens till June 30, 2021.
So, below we have worked on a list of banks providing the highest return on 3-year FDs which is a reasonable enough time:
Private Banks Best interest rate on FDs with 3-year maturity
|Private Banks||Best interest rate on FDs with 3-year maturity|
|IDFC First Bank||4.6%|
Now if you have inclination to deposit in the PSB account and returns dont matter much over safety that is seem to be offered more by public sector banks. Here are the banks that offer the highest return on 3-year FDs
Public Sector Banks Best interest rate on FDs with 3-year maturity
|Public Sector Banks||Best interest rate on FDs with 3-year maturity|
|Bank Of India||5.8%|
Furthermore, if you are comfortable putting your money with new age Small Finance Bank, here is the list of banks that can offer the highest return for three-year FDs:
Small finance Bank Best interest rate on FDs with 3-year maturity
|Small finance Bank||Best interest rate on FDs with 3-year maturity|
|Suroday Small Finance Bank||7.5%|
|Ujjivan Small Finance Bank||7.25%|
|Equitas Small Finance Bank||7.15%|
|AU Small Finance Bank||7%|
|Jana Small Finance Bank||7% ( no extra premium given for senior citizens by this bank)|
Now among the renowned private banks ICICI Bank and HDFC Bank offer 5.65% return on 3-year FDs while Axis Bank and Kotak Mahindra Bank offer 5.9% and 5.6% return per annum, respectively.
TDS on FD interest:
Here we shall discuss this aspect as well as interest income on FDs above Rs. 50000 in a year is liable for TDS at the rate of 10% from the interest income. And because of this investors incur a huge loss and this is true typically in case of long term FDs where there is loss owing to compounding over and above the amount that is deducted as TDS or tax deducted at source on FD income.
One way to however avoid this loss is to provide for savings account from which such a TDS deduction can be made i.e. getting the amount reduced from your savings account balance instead of the FD interest which accrues.
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