The best option for senior citizens looking to save a sizable amount of money is to put it into fixed deposits, where they will receive both their principal and interest.
Seniors who want low-risk investment options should consider funds for retirement (FDs). There are Senior Citizen FDs that allow high returns with minimal risk.
This article will explore the meaning of senior citizen FDs, their features and benefits, interest rates for senior FDs, and more.
A fixed deposit is a type of investment where you deposit money with a bank or non-bank financial institution (NBFC) for a predetermined period. For the duration of the investment, you are guaranteed a certain rate of return on your initial investment.
Senior Citizen FDs are specific fixed deposit plans designed for individuals over 60. Seniors can benefit from several advantages of these fixed deposit accounts, including premium interest rates. They receive more interest from it than from a standard FD.
The salient features of Senior Citizen FDs are as follows.
It typically lasts between seven days and ten years at most. Within this range, you can select the tenure that best suits your needs.
Depending on the bank, the minimum and maximum amount individuals can invest in fixed deposits vary.
Senior citizens can pledge FDs as security for a loan and the principal amount invested determines the maximum loan amount that can be claimed.
FDs typically allow for early withdrawal, which can serve as an emergency fund. However, banks charge a penalty for premature withdrawal of FDs, which varies by bank.
Whenever you open an FD account, you must state the nominee so that those who rely on you can claim the money easily.
Senior citizen FDs offer a plethora of benefits to their depositors. Some of the most prominent benefits are
Fixed deposits for senior citizens offer higher interest rates, resulting in higher earnings.
In addition to offering guaranteed returns on maturity, senior fixed-income investments offer a secure environment for your money to grow.
It is possible to pay interest each month, every quarter, or every year on a senior citizen's FD.
If senior citizens don't have an alternative source of income, they can use the interest they earn on FDs as a monthly income.
Section 80C of the Income Tax Act provides tax benefits up to Rs 1.5 lakh for senior citizens investing in a 5-year FD.
It is very easy to open an FD account. You can access it both online and offline, depending on your needs. The following documents are required to open a senior citizen fixed deposit account.
PAN Card or if PAN card is unavailable, Form 60
FD account opening application form
Address proof
Age Proof
ID
KYC Documents (Aadhar card/passport/driving license/voter ID)
Passport-size photographs
Form 15H or self-declaration form
Prominent Indian banks offer attractive interest rates to ensure senior citizens benefit the most in their retirement years. Here are the interest rates offered by India’s most popular banks.
The interest rates mentioned below are for the tenure of 7 days to 10 years and are applicable for FDs with deposits up to Rs. 2 crores.
| Name of The Bank | Interest Rate(p.a) |
|---|---|
|
Axis Bank |
5.30 - 7.75% |
|
Kotak Mahindra Bank |
3.25 - 6.70% |
|
HDFC Bank |
3.75 - 7.75% |
|
ICICI Bank |
3.50 - 7.50% |
|
Union bank |
3.75 - 7.45% |
|
Jana Small Finance Bank |
3.50 - 9% |
|
Unity Small Finance Bank |
3.60 - 9.11% |
|
Suryoday Small Finance Bank |
4.50 - 9.10% |
|
ESAF Small Finance Bank |
4.50 - 9% |
Please note that these rates are subject to change at the bank’s discretion. These rates are prevalent as of Dec 2023.
Saving for retirement is the main priority for many from the moment they start working. As senior citizens, we dream of enjoying our retirement with enough funds to sustain us for the rest of our lives. Along with your savings, additional investment in senior citizen FDs will provide regular income post-retirement.
For most senior citizens, an FD serves as the entry point to the majority of financial products that are tailored to their needs. It helps them live the life they dreamed of in peace.
Yes. To open an FD account for senior citizens, you must PAN as one of the documents.
You can open a fixed deposit account with some banks even if you don't have a savings account with them. To open a bank FD account without a savings account, simply go through a simple Know-Your-Customer (KYC) process.
Senior citizen FDs offer higher interest rates than regular FDs and allow returns to be deposited in the bank account monthly, quarterly, or yearly.
Having a nominee for an FD is advisable since it allows the transfer of funds to the family with ease in case the primary FD holder passes away.
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