A fixed deposit (FD) is an investment scheme offered by banks and NBFCs (Non-banking financing companies) and is fairly popular in India. The tenure for this investment is fixed, hence the name. In comparison to non-bank FDs, bank FDs are relatively risk-free since they do not come with the market and credit risk that non-bank FDs bring. However, bank FDs also bear slightly lower interest rates than non-bank FDs do. While FDs are suitable for people of all ages and walks of life, there are FDs that are specifically designed to meet the needs of investors who are senior citizens.
Why is it an ideal option for senior citizens?
The security that FDs offer as an investment scheme, makes it a viable option for senior citizens who are looking to set aside money and earn interest on the amount. The interest rate of a bank FD will differ depending on the amount deposited, the tenure of the deposit and the type of depositor. There are particular FDs in the market that cater to the unique needs of senior citizens, and both Indian citizens, as well as NRIs, are eligible for opening one.
A major reason FDs are ideal for senior citizens or the retired is the interest earned on the FD, which can act as monthly income and the FD rates for senior citizens. Moreover, FDs that have a lock-in period of 5 years carry tax benefits for senior citizens; investors can claim tax deductions with this investment according to section 80C of the Income Tax Act. An FD can also be closed prematurely making it a flexible scheme despite the fixed nature of the tenure.
Fixed Deposit Interest Rates for Senior Citizens:
The FD interest rates for senior citizens is a special feature that can be the deciding factor for investors. Most NBFCs and banks offer special senior citizen FD interest rates. In order to avail the senior citizen FD interest rates, the FD duration chosen by the investor should be over 1 year, since short-term deposits are not considered eligible for the special rates. However, it must be noted that some lenders may have terms and conditions on these interest rates that vary for each bank or company. Additionally, in case the account is a joint FD and the secondary account holder is a senior citizen, the senior citizen FD rates will not apply. The interest rate of bank FDs varies depending on the deposited amount, tenure of deposit, and type of depositor. As for NBFCs, some companies may offer higher interest rates to senior citizens, which can give them better returns.
Investors can find out the predicted effect of the tenure and interest levied in advance with the help of a fixed deposit interest rate calculator. While the tenure remains the same as a regular FD, the senior citizen FD interest rates are calculated on a quarterly basis and can either be credited to the investor’s bank account or added to the maturity value of the FD. Another feature of an FD scheme for senior citizens would include the deposit period which can range from 7 days to 10 years and determines the interest rates offered to an investor. The deposit amount for FDs can be any amount, going upwards of Rs. 1 crore and the upper limit is usually dependent on the bank or NBFC.
It’s essential for investors, especially senior citizens, to review all the features of FDs, and assess and compare your options carefully before taking the leap to invest. Finserv MARKETS is a one-stop platform for all your investment needs and offers you a range of options from several providers in India, from which you choose the one that suits your requirements the best.