Fixed deposits (FDs) remain a popular choice for senior citizens looking for stable and predictable returns.
The good news is that many banks offer higher FD interest rates to senior citizens than regular customers. In some cases, the additional benefit can be as high as 0.50 percentage points.
Some small finance banks are currently offering senior citizens interest rates of up to 8.50% on certain fixed deposits.
Suryoday Small Finance Bank Offers 8.50% Interest
Among the banks offering high FD rates, Suryoday Small Finance Bank is offering one of the highest rates for senior citizens.
Senior citizens can earn 8.50% annual interest on a 5-year FD with the bank.
Small finance banks often offer higher interest rates than traditional banks, making them an option for investors looking for better FD returns.
Other Small Finance Banks Offering High FD Rates
Suryoday is not the only bank offering attractive rates.
Here are the interest rates offered by some other small finance banks on 5-year FDs for senior citizens:
Jana Small Finance Bank: 8.00%
Ujjivan Small Finance Bank: 7.70%
Utkarsh Small Finance Bank: 7.50%
Equitas Small Finance Bank: 7.50%
These rates are applicable to 5-year fixed deposits of less than Rs 3 crore, according to the information provided.
For senior citizens, even a small difference in interest rates can make a noticeable difference to the total income earned over the investment period.
What Happens When FD Interest Crosses Rs 1 Lakh?
Senior citizens should also keep an eye on the tax rules related to FD interest.
If the interest earned from bank FDs exceeds Rs 1 lakh in a financial year, the bank deducts 10% TDS on the interest, subject to applicable tax rules.
If the customer does not provide a PAN, the TDS rate can be 20%.
The TDS deducted is not necessarily the final tax you have to pay.
It can be claimed as a refund or adjusted against your total tax liability while filing your Income Tax Return (ITR), depending on your overall tax situation.
Before Opening an FD, Compare the Rates
An FD may look simple, but the interest rate, tenure, deposit amount and tax treatment can all affect your final returns.
Senior citizens should therefore compare rates across banks and check the applicable terms before investing.
Higher interest can mean better returns, but the bank’s deposit insurance coverage, premature withdrawal rules and other conditions should also be considered.
