Fixed Deposit: How is it Beneficial for Senior Citizens

A fixed deposit, also known as “FD” is an investment instrument offered by banks and non-banking financial organisations. For this account, the bank promises the account holder a higher fixed rate of interest than a savings account. In exchange, the account holder cannot withdraw the deposited amount for a fixed period, the criterion for which differs for every financer. The interest is paid in full at the end of the given period.

The money from a fixed deposit account cannot be withdrawn before maturity; however, you can withdraw it only after paying the determined penalty.

Nowadays, the facility of automatic renewals at the time of maturity makes FDs much simpler. If no prior instructions are given while opening the account, then the FD will be automatically renewed on the maturity date. The FD is renewed for the same period for which it was initially placed, and at the interest rate prevailing on the date of auto-renewal.

 

How are they different for senior citizens?

 

Fixed deposits offer higher interest rates compared to other investment options with almost no risk involved. Especially if you are a senior citizen, banks generally offer a 0.5% higher interest rate for those above 60. You can choose to receive regular interest payouts to meet your expenses or you can collect the total interest at the time of maturity. Most banks are lenient and don’t penalise senior citizens for premature withdrawals. Some banks even pay the interest amount after a premature withdrawal.

 

Interest rates offered by different banks for senior citizens:

 

  • Jana Small Finance Bank: 5.6% to 9.10%
  • Suryoday Small Finance Bank: 4.5% to 9.5%
  • Utkarsh Small Finance Bank: 5.25% to 9%
  • SBI Bank: 5% to 7.5%
  • ICICI Bank: 4.5% to 7.6%
  • IDFC Bank: 7.75% to 8.50%
  • Yes Bank: 7.75%
  • IDBI Bank: 7.10% to 7.45%
  • Induslnd Bank: 7.85% to 8.00%
  • Canara Bank: 6.50% to 7.50%
  • HDFC: 7.10% to 7.50%

*The interest rate varies with the duration of the term deposit.

Fixed deposits are a safe space for your money to grow at a steady pace and the interest gained can be used for monthly expenses and can act like a source of supplementary income after retirement. Banks offer a sweet deal on FDs for senior citizens, paving the road to a peaceful post-retirement life.