8 min read • Published 10 Feb 25
FD for Senior Citizens in 2024: Understanding rates and benefits
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Financial security is of utmost importance to senior citizens, and fixed deposits (FDs) provide exactly that. FDs offer stability and guaranteed returns, and such certainty makes them one of the most popular investment options.
Given the revised FD interest rates in 2024, financial institutions are competing to attract senior citizen deposits, which presents a great opportunity to secure attractive interest rates. Senior citizens’ fixed deposits have increased by 143% in the last five years, with around 74 million deposit accounts.
This guide will explore the updated senior citizens’ fixed deposit rates in 2024 and list the main features of FDs, along with their benefits.
Key Features of Senior Citizen Fixed Deposits
The following are some unique features of FDs for senior citizens. They include higher returns, flexible tenures, and the safety of the principal.
1. Higher Interest Rates
Banks and NBFCs generally provide 0.50% to 0.75% extra interest rates to senior citizens on FDs, thus assuring them to generate higher investment returns. This would increase their post-retirement income and secure them financially.
2. Flexible Tenures
Under the senior citizen FD, there is also flexibility in tenures. It can range from seven days to 10 years. Such flexibility allows retirees to choose tenures that suit their financial goals better. The tenure could either be short for just a few months to meet the liquidity-driven tenure or long enough to generate income over time.
3. Safe and Secure
Fixed Deposits are one of the safest investment options, more so for senior citizens. There is an assured pay-in principal amount in FDs and guaranteed interest payout in any eventuality.
4. Premature Withdrawal Facility
Most banks and NBFCs permit senior citizens to withdraw their FDs in case of emergencies. Though a penalty might be applicable, the option to source funds when needed is always an added safety cover for their investment.
5. Automatic Renewal
Auto-renewal of an FD is a feature that automatically reinvests the principal amount and interest earned from a fixed deposit into a new FD for the same or a specified tenure.
Benefits of Senior Citizen FDs in 2024 – H2
Other than the interest rates, there are several other benefits of senior citizen FD. Some of them are tax-saving options, regular income generation, assured returns with no potential for loss, and more that lead to a secure and stable future for the retiree.
1. Tax-Saving Benefits
Senior citizen FDs, especially those tenured for five years or more, can enjoy the tax deduction provided under Section 80C of the Income Tax Act. Senior citizens can exempt up to ₹1.5 lakh per annum from FD investments.
2. Regular Income
Many banks and financial institutions even permit interest payouts to be received, either monthly or quarterly, or annually. This could ascertain that after retirement senior citizens can have a regular income basis to meet all their routine expenses without any financial burden.
3. Capital Protection
Fixed deposits in a traditional bank account do not involve any form of market fluctuation. One of the least risks attached to investment options, senior citizen FDs ensure complete safety of capital and assured returns.
4. Senior Citizen Special Schemes
Some banks offer special fixed deposit schemes specifically for senior citizens. These schemes provide higher interest rates than the regular ones and offer more flexible tenure options. A few financial institutions also extend additional benefits like opting for a loan against fixed deposit.
Taxation Benefits for Senior Citizens with FDs
Along with attractive interest rates, tax benefits on FDs make this route of investment appealing to senior citizens.
1. Tax Deduction Under Section 80C
It can be availed only when the FD is invested for more than five years. As long as the tenure is above five years, senior citizens can claim ₹1.5 lakh as an exemption under Section 80C of the Income Tax Act toward their FD investments.
This makes FDs a wonderful investment decision for the elderly who would like to save on tax without compromising on the stability of returns.
2. Tax-Free Interest Income
Under Section 80TTB, senior citizens will get an exemption of up to ₹50,000 every financial year on interest income from fixed deposits. Though this includes an exemption on interest from savings accounts, FDs return more.
3. Reduced Tax Deducted at Source (TDS)
With TDS nil or reduced on interest income of FD, senior citizens would benefit who get an issuance of declaration of his having total income below taxable limits by furnishing the Form 15H. Such would help in avoiding unnecessary source deductions. Senior citizens would receive the interest amount fully, and no amount would be deducted by furnishing the form 15H.
How to Choose the Best FD for Senior Citizens in 2024
With several banks and NBFCs offering different interest rates and features, one needs to select the right FD for individual financial goals. Choosing the correct FD involves analyzing factors such as interest rates, tenure, and additional benefits.
Here are some tips that will help senior citizens choose the best FD for their needs.
1. Compare Interest Rates
A good rule of thumb when choosing the best FD is to compare the interest rates offered by banks and NBFCs to find the most competitive option. Higher FD rates for senior citizens can significantly boost long-term returns, making it important to evaluate all available options before locking in your investment.
2. Look for Flexibility in Tenure
While some senior citizens will prefer short-term deposits for liquidity, others may opt for long-term deposits for a stable income. Thus, it is ideal to choose a tenure that meets one’s financial goals.
3. Check for Additional Benefits
Many banks offer additional benefits on FD, like loans against the FD, nomination facilities, and automatic renewals. These added benefits can bring about convenience and security to an investment and make it more effective.
4. Evaluate Premature Withdrawal Policies
Banks and NBFCs apply several premature withdrawal policies on fixed deposits. Few impose harsh penalties for early withdrawals, while some permit relatively lenient terms. Therefore, it is crucial to assess the terms and conditions to make informed financial decisions.
Updated Senior Citizen FD Interest Rates for 2024
The interest rate for fixed deposits is relatively higher for senior citizens compared to others.
Here is a peek at some of the best senior citizens’ fixed deposit rates in the year 2024:
| Bank/NBFC | Interest Rate (Senior Citizen) | Tenure Options | Minimum Deposit |
| State Bank of India (SBI) | 7.50% p.a. | 1 year to 10 years | ₹1,000 |
| HDFC Bank | 7.75% p.a. | 5 years to 10 years | ₹5,000 |
| ICICI Bank | 7.60% p.a. | 1 year to 5 years | ₹10,000 |
| Bajaj Finance | 8.00% p.a. | 1 year to 5 years | ₹25,000 |
| Punjab National Bank (PNB) | 7.70% p.a. | 3 years to 10 years | ₹5,000 |
| Axis Bank | 7.65% p.a. | 2 years to 10 years | ₹10,000 |
| Bank of Baroda | 7.55% p.a. | 1 year to 10 years | ₹1,000 |
| Canara Bank | 7.50% p.a. | 1 year to 10 years | ₹1,000 |
| IDFC First Bank | 8.00% p.a. | 1 year to 5 years | ₹10,000 |
| Kotak Mahindra Bank | 7.75% p.a. | 2 years to 5 years | ₹5,000 |
| IndusInd Bank | 8.05% p.a. | 1 year to 5 years | ₹10,000 |
| Union Bank of India | 7.70% p.a. | 1 year to 10 years | ₹1,000 |
| Indian Overseas Bank | 7.60% p.a. | 1 year to 10 years | ₹1,000 |
| LIC Housing Finance | 7.90% p.a. | 3 years to 5 years | ₹10,000 |
| Shriram Finance | 8.15% p.a. | 2 years to 5 years | ₹10,000 |
| Yes Bank | 7.85% p.a. | 1 year to 3 years | ₹5,000 |
| UCO Bank | 7.60% p.a. | 1 year to 5 years | ₹1,000 |
| IDBI Bank | 7.55% p.a. | 1 year to 5 years | ₹5,000 |
| Federal Bank | 7.75% p.a. | 1 year to 5 years | ₹5,000 |
| RBL Bank | 8.00% p.a. | 1 year to 5 years | ₹10,000 |
| Karnataka Bank | 7.70% p.a. | 1 year to 5 years | ₹5,000 |
| South Indian Bank | 7.80% p.a. | 1 year to 5 years | ₹10,000 |
| DCB Bank | 8.10% p.a. | 1 year to 3 years | ₹5,000 |
| Bandhan Bank | 7.85% p.a. | 1 year to 5 years | ₹10,000 |
| Bank of Maharashtra | 7.60% p.a. | 1 year to 5 years | ₹1,000 |
| Tamilnad Mercantile Bank | 7.90% p.a. | 1 year to 5 years | ₹5,000 |
| Suryoday Small Finance Bank | 8.25% p.a. | 1 year to 5 years | ₹10,000 |
| Jana Small Finance Bank | 8.35% p.a. | 1 year to 5 years | ₹10,000 |
| ESAF Small Finance Bank | 8.30% p.a. | 1 year to 5 years | ₹10,000 |
Conclusion
An FD is one of the safest and most reliable investment options for a senior citizen. Its added benefits, including higher interest rates, guaranteed returns, and potential tax-saving opportunities, provide financial security.
When choosing their preferred FD, senior citizens can maximize their savings by carefully comparing the interest rates, tenure options, and additional benefits offered. Making informed decisions ensures that seniors get the maximum returns from their investments while safeguarding their financial future.
Disclaimer: The information provided is for informational purposes only. PowerUp is not responsible for any errors, omissions, or outcomes related to the use of this information.
Q: What are the benefits of senior citizen FDs in 2024?
Senior citizen FDs have higher interest rates, flexible tenures, tax-saving options, and assured returns, making them the best low-risk investment for retirees.
Q: Can senior citizens withdraw FD prematurely?
Yes, most banks and NBFCs offer the facility of premature withdrawal from the senior citizen FDs, although it does carry a penalty with it. So, it offers liquidity in case an urgent requirement crops up.
Q: How do senior citizen FDs offer tax-saving benefits?
Senior citizen FDs with more than five years of tenure are tax-deductible under section 80C of the Income Tax Act, where deductions of ₹1.5 lakh per annum are allowed.
Q: What should senior citizens look for while finalizing which FD to choose?
While finalizing which FD to choose, senior citizens need to consider factors like FD interest rates, tenure flexibility, premature withdrawal, tax benefits, and the credibility of a financial institution. They should also read about the FD's safety ratings to ensure they align with their financial planning and risk appetite.
