Senior Citizen FD: Features, Benefits, Interest Rates

Fixed deposits (FDs) have been one of the safest investment options, particularly for senior citizens looking for stability. With the benefit of high interest rates and low risk, fixed deposits offer seniors a reliable income source to meet their financial needs in retirement. 

We have presented a complete guide on senior citizen FD to help you book one for yourself. Explore the features, benefits and interest rates currently being offered to senior citizens to understand if these are the right investment options for you. 

What is a Fixed Deposit for Senior Citizens?

A fixed deposit for senior citizens is a safe investment option that provides guaranteed returns to people aged 60 and above. The minimum amount required in an FD for senior citizens depends on the bank. Its tenure ranges between 7 days and 10 years, which you can select as per your requirements. Senior citizens are usually entitled to slightly higher interest rates compared to depositors under the age of 60 years. 

Features of Fixed Deposits for Senior Citizens

The key features of fixed deposits for senior citizens are: 

1. Tenure: The tenure of this fixed deposit ranges between 7 days and 10 years. 
2. Calculation of Interest: Some banks may calculate interest on a monthly, yearly, or semi-annual basis. On the other hand, some banks may choose quarterly compounding. 
3. Additional FD Rate: An additional fixed deposit rate (ranging between 0.25% and 0.65%) over the base rate is applicable in most schemes. 
4. Tax-Saving: FD with a lock-in period of 5 years is tax-saving and is eligible for deductions u/s 80C of the Income Tax Act. It makes you eligible for deductions up to ₹1.5 lakh. 

Interest Rates on Senior Citizen Fixed Deposits

Interest rates on senior citizen FDs vary depending on the bank or NBFC, the deposit tenure, and RBI policies. Take a look at the table below to understand what most banks are offering to senior citizens:

Benefits of Fixed Deposit for Senior Citizens 

The most notable benefits of investing in FD for senior citizens are: 

1. Higher Interest Rates: As mentioned before, senior citizen FD offers around 0.5% more returns over the base rate. This allows senior citizens to get more income without taking higher risks. 
2. Low Risk: Fixed deposits are known as one of the most secure and reliable investment options. These are not dependent on market changes and do not change the return set at the time of opening the account. 
3. Source of Regular Income: You can use the earned interest on fixed deposits as a regular income. In addition to this, you can manage your finances accordingly and secure retirement. 
4. High Security and Guaranteed Returns: Fixed deposits are not subject to market fluctuations. Along with this, it also offers guaranteed returns. This makes fixed deposits a good investment option for senior citizens. 
5. Capital Protection: The principal amount in a fixed deposit has capital protection. This ensures that the investment retains the same value in the long run. Capital protection makes fixed deposits a reliable investment option for investors with a low-risk tolerance level. 

Documents Required to Open an FD for Senior Citizens

Following are the required documents that you must keep in hand to open a FD for senior citizens:

1. PAN Card
2. KYC documents (passport, voter ID, driving licence, Aadhaar card)
3. Self-declaration form or Form 15H
4. Application form for FD account opening 
5. Passport-size photographs 

Eligibility Criteria to Open an FD for Senior Citizens

The following are the eligibility requirements to be met to open a fixed deposit for senior citizens: 

1. If you are 60 years of age or above, you are eligible to open a senior citizen fixed deposit account. 
2. Few banks have provisions for people 80 years of age and above. In that case, you will be offered additional FD rates than general citizens and the rest of the senior citizens. 

How to Select the Proper Fixed Deposit for Senior Citizens

You need to examine several factors before you select a fixed deposit which is best suited for you. Some of them are: 

1. Tenure: You must select a tenure which caters to your objectives. Long-term fixed deposits offer higher interest rates, while short-term fixed deposits provide better liquidity. You must analyse your financial goals properly before selecting an FD. 
2. Penalty for Premature Withdrawal: Ensure that you check the penalties for withdrawals set by your bank. Some banks penalise early withdrawals, which can further affect your returns. To avoid this, go through the policies and select a bank with more favourable terms.  
3. The Reputation of the Bank: Select a bank with a strong reputation and a credible financial status to ensure your investment's security. It is, therefore, advisable to select a bank with a reliable track record. 

Senior citizen FDs are a safe and reliable investment choice for senior citizens to earn stable returns on their savings. With options of flexible tenures, regular interest payouts, etc., fixed deposits allow you to enjoy a steady income and secure your retirement. Get the best fixed deposit with excellent features with the help of the Stable Money application.