Senior Citizen Fixed Deposit Rates
Senior citizen fixed deposit is specifically dedicated to people who are 60 or above 60 years. Under the Senior Citizen FD scheme, senior citizens enjoy special interest rates.
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What is a Senior Citizen FD?
Senior Citizen Fixed Deposit is one of the preferred means of investment for senior citizens. Senior Citizen FDs provide the elderly with the privilege to earn a slightly higher interest rate as compared to general citizens. It is important to note that the rate of interest also varies based on multiple factors, tenure being one of all based on which the rate is decided. However, apart from special FD interest rates, Senior Citizen Fixed deposits also provide benefits like regular payout option, loan against FD and more.
Features of Senior Citizen Fixed Deposit
Senior citizen fixed deposit schemes come with a wide range of features, which are quite significant to be considered before making any form of investment. The list of prime features includes:
- Safe space for money to grow.
- The tenure for senior citizen fixed deposit can range between 7 days to 10/20 years
- In most schemes, an additional FD rate (usually between 0.25% to 0.65%) is applied.
- Senior citizen FD with a 5-year period allows tax saving.
- Elderly investors can claim 80C deductions for up to Rs. 1.5 Lakh.
- Bulk deposits starting from Rs. 2 crores available.
- Interest payout options include monthly, annual, semi-annual basis or quarterly.
Eligibility for Senior Citizen FD
Senior citizen fixed deposit or FD is eligible for senior citizens who are of or above the age of 60 years. While most banks consider the age of 60 years and above as eligible, few banks consider super senior citizens as well. Super senior citizens include individuals above 80 years. It must be noted that super senior citizens are provided with extra fixed deposit interest rates over the rates granted to senior citizens and general citizens.
Things to Remember Before Investing in Senior Citizen FD
Here are some of the key things that an investor must remember before investing in Senior Citizen Fixed Deposit:
Minimum & Maximum Investment Amount
An investor must be aware of the fact that the minimum deposit amount varies from bank to bank. So, the investment amount must be chosen as per the same.
Banks allow an FD account to be opened for a defined minimum and maximum period. This tenure or fixed deposit period usually lies between 7 days to a maximum of 10 years. An investor can choose the tenure of their choice keeping their specific needs in mind.
As per the Section 80TTB of the Income Tax Act, the elderly investors or senior citizens are permitted to claim a deduction of up to Rs. 50,000. The deduction can be claimed on interest income earned from the below mentioned entities:
- Interest income from bank savings and FDs
- Interest earned on post office deposits
- Interest earned on cooperative society (engaged with banking business) deposits.
It is important to note that no TDS is deducted from the interest payments made up to Rs. 50,000 in one financial year. A senior citizen can submit Form-15H to the bank in order to avoid the TDS deduction.
FDs usually come with the facility of premature withdrawal, which in turn, can act as an emergency fund. It is important to note that banks levy a penalty in the case of premature FD withdrawal that differs from bank to bank. Nonetheless, nowadays a few banks do not charge a penalty. As a matter of fact, some banks also provide FDs without a premature withdrawal facility.
Loan Against FD
Fixed deposit accounts can be used to obtain a loan. The maximum loan sanctioned is dependent on the principal amount. Additionally, it is usually a certain percentage of the principal amount. It is important to note that this percentage can vary across different banks.
Before opening a fixed deposit amount, it is important to be clear of the nominee and mention the same while opening the account. Nomination is a must so that individuals dependent on the investor do not face any difficulties while claiming their money. The depositor needs to fill the Form DA1, a separate form while providing their nomination.
In today’s time, banks provide the automatic renewals facility at the time of FD maturity. This means that if no instructions are provided at the time of account opening, the FD will be automatically renewed once mature. The tenure will be the same as that of the existing FD account.
How to Open a Senior Citizen FD Account?
Opening a senior citizen FD account in banks is quite simple. You can either open the FD account online or visit the bank directly as per your choice. Note that in today’s time, most banks accept online form submissions where the investor can fill in the details and submit their FD account opening form online. The deposit amount is generally debited from the applicant’s preferred savings bank account. A senior citizen can also choose to receive their interest payout either monthly, quarterly, or annually.
If you wish to open a senior citizen fixed deposit account in a post office, you must visit the post office. Fill the relevant FD opening form and deposit the investment amount by submitting either a cheque or demand draft.
Documents Required for Opening a Senior Citizen Fixed Deposit?
If you want to open a senior citizen fixed deposit account, it would be a must for you to be prepared with a few important documents. The list of key documents would include:
- Recent passport-sized photograph.
- Duly filled fixed deposit form.
- Proof of age such as PAN Card, Aadhaar Card, etc., that proves that the age is more than 60 years.
- Proof of address such as Passport, electricity bill, etc.
- Proof of signature like PAN Card, driving license.
Why Should You Choose Life Insurance Over Senior Citizen Fixed Deposit?
Senior citizen fixed deposit is one of the best ways the elderly can ensure savings. However, life insurance too is one of the popular choices among senior citizens to invest their money and secure their future. Life insurance is a contract between an insurance company and an individual in which the insurer promises to pay a specific sum of money in case of the unfortunate demise of the life assured or once the policy gets mature.
Find below some of the prime reasons you should consider investing in life insurance rather than senior citizen fixed deposit:
- Life insurance will give you the dual benefit of investment along with insurance.
- Life insurance will protect you against risks and keep your family financially stable even if you are not there to provide for your loved ones anymore.
- Life insurance will provide you coverage for years, even the whole lifetime.
- Life insurance will keep you covered for a longer time period than you pay the premium for.
- Life insurance will provide you with a series of options like ULIP, savings and more to choose from based on your specific needs.
- Life insurance will grant you with tax benefits according to the Section 80C and Section 80D of the Income Tax Act, 1961.
Disclaimer: The above information in relation to Fixed Deposits is for education purpose only and not to be construed as investment advice. Consultation with an investment advisor prior to any investment decision is highly recommended.
Investment Insurance Companies
- Kotak Life Investment
- Future Generali Investment
- SBI Life Investment
- PNB MetLife Investment
- HDFC Life Investment
- ICICI Prudential Investment
- LIC Investment
- Max Life Investment
- Tata AIA Investment
- Bajaj Allianz Investment
- Aegon Life Investment
- Aditya Birla Sun Life Investment
- Bharti AXA Investment
- Edelweiss Tokio Investment
- Pramerica Life Investment
- Canara HSBC Investment
- Reliance Nippon Investment
- Shriram Life Investment
- India First Life Investment
- Sahara Life Investment
- Aviva Life Investment
- Ageas Federal Life Investment
- Star Union Dai-Ichi Investment
Disclaimer: InsuranceDekho does not endorse, rate or recommend any particular insurance company or insurance plan.
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FAQ About Senior Citizen Fixed Deposit Rates
What is the eligibility age for senior citizen fixed deposit?
The eligibility age for senior citizen fixed deposit is 60 years and above.
How much tax can senior citizens claim under senior citizen fixed deposits?
Senior citizens can claim tax under senior citizen fixed deposit for up to Rs. 1.5 Lakh.
What documents are required to open a Senior Citizen FD account?
Photo ID proof, residence proof, age proof, and Form 15H are required for opening a senior citizen fixed deposit account.
What is the term for senior citizen fixed deposit?
The term for senior citizen fixed deposit is between 7 days to 10/20 years.
Is nomination available under senior citizen fixed deposit?
Yes! Nomination is available under senior citizen fixed deposit.