Senior Citizen FD is a term deposit plan that top banks offer to people over 60 with special interest rates. The FD interest rate for senior citizens can go up to 0.5 to 1% higher than the rate for the general public. But that’s not all. The option to pay out interest regularly can help retirees get a steady stream of income after they stop working. They can also get a loan against the FD if they need to. If the senior citizen FD is a 5-year tax saver Fixed Deposit, it can also help save tax money and earn more interest.

Advantages of FD for Senior Citizens

Opening a Fixed Deposit for senior citizens has a lot of benefits, the most important of which are:

  • They offer special interest rates, usually higher, so you can get better returns.
  • It gives your money a safe place to grow steadily. You can turn the interest you earn on these deposits into a monthly income, giving you more peace of mind when you retire.
  • The Fixed Deposit for senior citizens can also be a tax free Fixed Deposit, which helps people get tax deductions under Section 80C of the IT Act.
  • Seniors can choose from different ways to get their interest. Interest can be added to their savings account monthly, quarterly, half-yearly, or annually.
  • The option to get regular interest payments can be helpful for retired people because it gives them a steady income.

Senior Citizen Fixed Deposit Features

Here are a few major features of the Fixed Deposits for senior citizens.

  • The time you can put money into these Fixed Deposits varies from bank to bank, from 7 days to 10 years.
  • There are also nomination facilities on these deposits, which allow depositors to name a person as their nominee. 
  • The FD interest rates for senior citizens majorly depend on how long the term deposit will be.
  • The interest earned is compounded every three months and can be deposited into an account or added to the Fixed Deposit’s maturity value. Once the Fixed Deposit is set up, it can be closed early at any time. You can’t do this with a tax saver FD; if you do it with a regular FD, the bank might ask you to pay the penalty.
  • The maximum you can put into these deposits is Rs.1 crore, but you can put in more if you want to. The banks set these limits, which may differ from one bank to another. 
  • Some of these deposits can even be tax saver Fixed Deposits with lock-in periods of 5 years and special interest rates for seniors.

Senior Citizen Fixed Deposit: Who Can Get One?

If you wish to open a Fixed Deposit for senior citizens, you must live in India. Senior NRIs can also open FDs with their NRE or NRO accounts. You must also be at least 60 years old when you open the Fixed Deposit. Some banks might let customers who are over 55 and have retired early can apply for this FD. This rule may differ from one bank to another and is subject to specific terms and conditions.

Taxes on FDs for senior citizens

Depending on the laws, senior citizens’ interest earned on Fixed Deposits may be subject to income tax. If there are any taxes, they are taken out at the source. If you don’t want the bank to deduct the TDS, you can fill out forms 15G or 15H and give them to the bank. The interest may not be taxed if the term deposit is NRE. However, the interest may be taxed if the Deposit is an NRO or FCNR.

Final words

Senior citizen Fixed Deposits are the most profitable investment option for people over 60. Top banks provide these term deposit options at exceptional interest rates. The FDs offer advantages like consistent and guaranteed returns, being mortgaged to get a loan and saving income tax. So if you are searching for a reliable post-retirement option for savings, this is the best time for a senior citizen FD.