Fixed Deposit for senior citizens: Interest rates and benefits

India’s elderly population (aged 60 and above) is expected to reach 340 million by 2050. As more people transition into retirement, the need for secure and stable financial options is also becoming important. It's natural for senior citizens to worry about protecting and growing their hard-earned savings, especially in an environment of unpredictable markets and fluctuating interest rates. That's where a Fixed Deposit (FD) for senior citizens helps. 

This type of FD is specifically designed for individuals aged 60 and above and offers exclusive benefits tailored to this age group. Let's explore the interest rates and key benefits of FDs for senior citizens and understand how these investments protect their financial well-being.

Interest rates on FDs for senior citizens

Senior citizen FD interest rates are usually 0.25% to 0.50% higher than what is available to younger depositors. This additional interest is meant to provide senior citizens with better returns on their savings and help them generate a steady income. While this increase may look modest at first, it can significantly impact the total interest accumulated over the FD tenure.

Let's consider a practical scenario:

If you invest Rs 5 lakh in a regular FD at 7% annual interest for 5 years, you will earn approximately Rs 2,07,389 in interest. This brings the maturity amount to Rs 7,07,389. A senior citizen FD offering 7.50% interest for the same tenure will yield around Rs 2,24,974 in interest. Here, the maturity amount would be Rs 7,24,974.

As you can see, this 0.50% difference in interest results in an additional ₹17,585 over 5 years.

Benefits of opting for senior citizen FDs

Key features of senior citizen fixed deposit schemes include:

Zero risk and insurance

FDs are one of the most risk-free investment options as they are not subject to market volatility. The capital is preserved, and the interest rates are higher than regular FDs. Moreover, deposits up to ₹5 lakh are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), which makes FD investments safer. Hence, your hard-earned savings stay protected and you enjoy risk-free, stable growth.

Regular income through multiple payouts

IndusInd Bank Fixed Deposits offer a reliable way to receive regular income through periodic interest payouts. You have the flexibility to select from monthly, quarterly, or yearly payout options. This allows you to access a portion of your earnings routinely while the principal continues to grow at the predetermined interest rate. This approach helps you manage regular expenses effortlessly without sacrificing your long-term savings plans.

Look at the additional value-added benefits of IndusInd Bank Fixed Deposits:

• Book an FD quickly with only PAN and Aadhaar details

• Enjoy high interest rates for better returns

• Take advantage of tax-saver FDs to reduce tax liabilities 

• Get exclusive offers on numerous banking products

• Automatic renewal options allow your savings to grow uninterruptedly

• Seamless digital banking through the IndusMobile app and IndusNet banking

You can also use an FD calculator to estimate your future returns. This helps optimise your FD investment strategy to reflect your financial goals, return expectations, personal needs, and preferred liquidity options.

Exclusive tax benefits

Senior citizens in India benefit from Section 80TTB of the Income Tax Act, 1961, which was introduced in the 2018 budget. This section allows senior citizens to claim a deduction of up to ₹50,000 on interest earned from bank deposits, including FDs. It helps reduce the overall tax burden and keep more of your hard-earned money.

Premature closure is allowed

It's true that FDs are locked in for a fixed tenure, but many banks allow senior citizens to withdraw their deposits before maturity. Whether it's due to emergencies or unexpected financial needs, this feature provides much-needed liquidity. Note that a small penalty may be charged for early withdrawal (usually between 0.5% to 1%).  

Loan against FD 

Instead of breaking the FD prematurely, it is wise to take a loan against it. Many banks offer the option to borrow up to 75-90% of the deposited value at low interest rates. This way, you get to meet your financial requirements without breaking the FD or losing the interest you have patiently accumulated. Your FD remains intact and continues to earn interest while you benefit from the loan. 

Since the bank already has your documents from when you opened the FD, there is usually no need for extra paperwork. 

Additional benefits and services

Banks often offer additional exclusive benefits and services to senior citizens to enhance their banking experience. These may include:

• Preferential service at branches with dedicated counters

• Priority customer service for quicker resolution of queries

• Exclusive helpline numbers and doorstep banking services  

• Discounted locker charges for safe storage of valuables

• Concierge services for managing banking needs remotely

• Higher withdrawal limits on debit cards

• Waiver on certain transaction fees, such as ATM withdrawal limits 

• Access to special banking products, such as senior citizen savings accounts

Opening a fixed deposit account in 4 quick steps with IndusInd Bank

Opening an IndusInd Bank Fixed Deposit is fast, easy, and 100% digital, which means no bank visits, physical paperwork, or hassles. Below are the steps that both IndusInd Bank and Non-IndusInd Bank customers can follow to open a fixed deposit:

Step 1: Submit your PAN and Aadhaar details for quick verification

Step 2: Enter your personal information and provide your FD details

Step 3: Complete the Know Your Customer (KYC) process over a video call 

Step 4: Finally, fund your FD and watch your investment grow

To sum up

An FD for senior citizens offers a wealth of benefits that go far beyond simple financial returns. It offers a low-risk and dependable investment avenue that fulfils both short-term and long-term financial needs of investors. Higher interest rates, regular payouts, and tax benefits under Section 80TTB help senior citizens maximise their savings effortlessly. Moreover, features like loans against FDs and access to exclusive services like doorstep banking and preferential treatment add more convenience.

Together, these benefits offer senior citizens the peace of mind and financial independence they truly deserve during their golden years.