There is a bonanza for senior citizens who love to invest in fixed deposits. Private and public sector banks have lined up interest rates up to 8 per cent on three-year FDs for senior citizens, data compiled by BankBazaar shows. The elders should invest a part of their savings in fixed deposits, which offer liquidity and ensure interest income periodically. The savings are useful to build an emergency corpus. Although bank FD interest is taxable, a lower tax slab for most senior citizens ensures that tax liability is minimal or nil if other income is negligible.
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According to the Reserve Bank of India's financial year 2022 data, investors prefer to park their money in leading public sector banks and private banks’ fixed deposits. As per the data, FD investment in leading public sector banks and private banks comprises 76 percent of total bank deposits. This is despite smaller private banks and small finance banks offering higher interest rates to garner newer deposits.
The key parameter for identifying these banks is the interest rate of the top 20 banks (according to their total term deposit position reported with the RBI as on March 31, 2022). Data as on respective banks' website on Oct 20, 2023. Banks for which data was not available on their websites have not been considered. The data includes 3-year deposit of senior citizens (60-80 years) for an amount below Rs 1 crore. The value is calculated on the basis of quarterly compounding of interest. Minimum investment amount may vary depending on the type of term deposits account.
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YES Bank and IndusInd Bank offers 8 percent interest on three-year FDs for senior citizens. Among private banks, it offers the best interest rates. A sum of Rs 1 lakh invested grows to Rs 1.27 lakh in three years.
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Bank of Baroda offers 7.75 percent interest on three-year FDs for senior citizens. Among public sector banks, it offers the best interest rates. A sum of Rs 1 lakh invested grows to Rs 1.26 lakh in three years.
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Axis Bank offers 7.60 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.25 lakh in three years.
HDFC Bank, ICICI Bank and Punjab National Bank offers 7.50 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.25 lakh in three years.
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Canara Bank offers 7.30 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.24 lakh in three years.
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Bank of India offers 7.25 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.24 lakh in three years.
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Federal Bank offers 7.10 percent interest on three-year FDs for senior citizens. A sum of Rs 1 lakh invested grows to Rs 1.24 lakh in three years.
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The Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI, guarantees investments in fixed deposits of up to Rs 5 lakh.
Hiral Thanawala is a personal finance journalist with 9 years of reporting experience. Based in Mumbai, he covers financial planning, banking and fintech segments from personal finance team for Moneycontrol.
Unity Small Finance Bank FD rates for general customers
It offers interest rates between 4.5% to 9% for regular consumers. Senior citizens get an interest rate ranging from 4.5% to 9.5% on deposits maturing in seven days to ten years. The deposit interest rate stands revised from 3 February 2024.
ICICI Bank FD Interest Rates. ICICI Bank offers FD rates of 3.00-7.20% p.a. to the general public and 3.50-7.75% p.a. to senior citizens on tenures ranging from 7 days to 10 years. The bank also offers Tax Saving FD @ 7.00% p.a. for the general public and 7.50% p.a. for senior citizen depositors for tenures of 5 years.
SBI offers FD interest rates of 3.50%-7.10% p.a. to the general public and 4.00%-7.60% p.a. to senior citizens for tenures ranging from 7 days to 10 years. The interest rate of SBI Tax Saving FD is 6.50% p.a.
DCB Bank offers up to 8% interest on savings accounts with balances ranging from Rs 10 lakh to less than Rs 2 crore. The bank pays 7.75% interest on savings account balances ranging from Rs 10 crore to less than Rs 200 crore. The rates are effective from September 27, 2023.
Best overall bank account for seniors: Chase Total Checking. The Chase Total Checking account gives you access to more than 4,700 branches and 16,000 ATMs.
It allows you to save tax on earnings under Section 80C of the Income Tax Act. Regular interest payout is the biggest boon of Senior Citizen FD Account as it can act as a regular income source. Once you retire, you will need to continue investing in order to ensure regular income.
AU Small Finance Bank and Equitas Small Finance Bank offers 8 percent interest on three-year FDs. A sum of Rs 1 lakh invested grows to Rs 1.27 lakh in three years. Among foreign banks, Deutsche Bank offers the best interest rates. Deutsche Bank offers 7.75 percent interest on FDs of three-year tenure.
Utkarsh Small Finance Bank offers up to 8.5% interest on FDs for general citizen. Utkarsh Small Finance Bank offers interest rates ranging from 4% to 8.50% for regular citizens for fixed deposits maturing between seven days and 10 years.
7% Interest Savings Accounts: What You Need To Know
As of May 2024, no banks are offering 7% interest rates on savings accounts.
Two credit unions have high-interest checking accounts: Landmark Credit Union Premium Checking with 7.50% APY and OnPath Credit Union High Yield Checking with 7.00% APY.
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