Banks and other Non-Banking Financial Companies (NBFCs) provide their customers with various investment options. Fixed Deposits, or FDs, are one such investment option. A Fixed Deposit is a type of investment in which you can deposit your funds for a fixed period. Fixed Deposits are a popular choice among investors for both medium and long-term investments due to their low risk and fixed interest rates.
Senior Citizen Fixed Deposit
Usually, senior citizens seek out safe investment options that offer them a guaranteed income. Senior Citizen Fixed Deposits (FDs) are term deposit plans with special interest rates offered to individuals over 60 years of age.
In their post-retirement years, senior citizens may benefit from the option of regular interest payout by receiving a steady and reliable income. Even though there are many investment options to explore, fixed deposits (FDs) remain one of the preferred choices of senior citizens because they provide assured returns without any financial risk. Most banks and NBFCs offer an additional interest rate over and above the regular fixed deposit interest rates to senior citizens.
Features of Senior Citizen FDs
Some of the salient features of senior citizen fixed deposit schemes offered by banks are:
- The tenure can be anywhere between seven days to twenty years or even longer.
- The interest rates are usually 0.25% to 0.75% higher than those of regular FDs.
- If you choose a 5-year tax-saving fixed deposit scheme offered by banks, the amount deposited is allowed as a deduction from your taxable income. A deduction of up to Rs. 1.5 lakhs is allowed u/s 80C of the Income Tax Act,1961.
- The interest earned on these deposits is exempt from tax for an amount up to Rs 50,000 u/s 80 TTB of the Income Tax Act, 1961.
- Senior Citizen Fixed Deposit schemes are now available in both online and offline modes.
- Further, certain banks and NBFCs allow senior citizens to take partial or premature withdrawals from fixed deposits. However, depending on the bank or financial institution, a fee may be levied on such withdrawals.
Some institutions only allow premature withdrawals after a specific lock-in period. However, premature withdrawals are not allowed for 5-year tax-saving fixed deposit schemes.
Eligibility for Senior Citizen Fixed Deposit
Any individual who fulfills the required criteria can invest in the Senior Citizen Fixed Deposit:
- The individual must be 60 years of age or older.
- Both Indian residents and NRIs can opt for this scheme
- Individuals who have taken early retirement are allowed by some banks to apply for this FD scheme. This may differ from bank to bank and is subject to certain terms and conditions.
The Benefits of a Senior Citizen FD Investment
The following benefits are available to senior citizens who invest in Senior Citizen Fixed Deposit schemes:
- Guaranteed Returns: Senior citizens can be certain of the returns on their fixed deposits. The FD interest rates are pre-determined and do not change after the investment is made.
- Minimum Risk Factor: Returns on fixed deposits are guaranteed at predetermined interest rates. The risk is low as compared to other market-linked instruments.
- Higher rate of interest: Senior citizens usually get higher FD rates. For instance, Axis Bank offers senior citizen benefits to individuals above the age of 60 (up to 0.75% p.a extra on senior citizen fd rates ).
- Ease of opening: Senior citizens often choose fixed deposits since they are easy to open and require little paperwork.
Documents Required for Opening a Senior Citizen FD Account
Typically, the following documents are required to open a Senior Citizen Fixed Deposit Account:
- Duly filled and signed Senior Citizen Fixed Deposit form/application.
- Photo Identity Proof of the depositor
- Age Identity Proof of the depositor
- Address Identity Proof of the depositor
Traditionally, opening a fixed deposit account always required a visit to the local branch of your bank/NBFC. However, thankfully, that is not the case anymore. Please read on below.
How To Open A Fixed Deposit Account Digitally On Kuvera
- Download the Kuvera app and complete the KYC process.
- Go to Invest > Fixed Deposits and check out FD options from multiple banks and NBFCs that are available. Compare tenures and interest rates and choose the one that works best for you.
- Complete the payment process and you are done within minutes!
Frequently Asked Questions (FAQs)
- Who is eligible to open a Senior Citizen Fixed Deposit account?
An account for Senior Citizen Fixed Deposit can be opened by anyone 60 years of age and above. For more information, you can refer to the details mentioned in the above paragraphs.
- Do Senior Citizen FDs provide a higher rate of interest?
Yes, Senior Citizen Fixed Deposits offer a higher interest rate when compared to regular FDs.
- What is the minimum amount required to open a Fixed Deposit account through Kuvera?
You must deposit a minimum of Rs. 5,000 to open a Fixed Deposit through Kuvera.
- Can you take a loan against Senior Citizen Fixed Deposits?
Yes, you can take a loan against senior citizen fixed deposits.
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