Best Senior Citizen FD Interest Rates

As a senior citizen with funds at your disposal, you should look for a safe mode of investment. In this case, bank fixed deposits, or what are popularly known as FDs, are a good and reliable option and attractive too. Most banks will offer senior citizens, a higher rate on fixed deposits than what they pay to other category of investors. 

A fixed deposit is a financial instrument provided by banks which provides investors with a rate of interest, against a fixed maturity period. But in a fixed deposit, the money invested by you cannot be withdrawn without incurring losses, as compared to a recurring deposit or a demand deposit, before maturity.

For banks, senior citizens are prized customers because they have large funds at their disposal and prefer to invest them in fixed deposits. They are considered to be the most active investors in fixed deposits.  There is a keen competition among private sector banks to offer the best possible interest rates to senior citizens. But public sector banks are also not behind in this race and have good offers lined up for senior citizens on fixed deposits. They are also advertising their exclusive interest rates on fixed deposits for senior citizens. The longer the tenure of fixed deposits, the higher the interest rates on them. Generally, the tenure of an FD can vary from 7, 15 or 45 days to 3 years and can be as high as 10 years (for details see the table below).

Some banks may offer additional services to senior citizen FD holders such as loans against FD certificates at competitive FD interest rates

Significantly, the age limit for the senior citizen category has been lowered from 65 to above 60 years. Thus, banks now have an even bigger number of senior citizen customers, who can invest their bulk money in fixed deposit instrument. And, if the interest rates on these deposits are made even more attractive, there is added reason for senior citizens to invest more and more of their surplus funds in bank fixed deposits. 

S.No.	Bank	Tenure	Interest
1	Yes Bank	480 days	10.60%
2	South Indian Bank	300 days	10.50%
3	Dhanalaxmi Bank	300 days	10.50%
4	City Union Bank	1 year to less than 2 years	10.50%
5	Tamil Nadu Mercantile Bank	1 year to less than 2 years	10.50%
6	Axis Bank	1 year to less than 14 months	10.40%
7	Indian Bank	9 months to less than a year	10.40%
8	IDBI Bank	500 days	10.25%
9	Corporation Bank	12 months	10.25%
10	KarurVysya Bank	1 year to 3 years	10.25%
11	Syndicate Bank	250 to 364 days	10.05%
12	ICICI Bank	990 days	10.00%
13	Indian Overseas Bank	1 year	10.00%

What is difference between Cumulative Deposits and Fixed Deposits?

Everyone wants to save something for the rainy day and invests in different instruments to create wealth. Cumulative deposits and fixed deposits are two very dependable as well as attractive modes of investment to ensure accumulated funds at one’s disposal after a certain period.

Both of these deposits differ in many aspects. Both of them provide you interest at prevailing rates but in fixed deposits (FDs), you may receive interest payable at specified frequency. So, FDs are ideally suited for you if require periodical interest payment. But in cumulative deposits, interest is payable only at the time of maturity along with the principal amount. Depending upon the bank, interest is calculated quarterly or half yearly and added to your principal amount.

In cumulative deposits, you have to invest a specified amount every month into your account and the total amount with interest is paid at the end of the specified period. You get the benefit of receiving both interest and maturity amount at the end of the term. So, if you do not require periodical interest payment, and don’t need the money before maturity period, you may go for cumulative deposits.  In other words, cumulative deposit scheme is more profitable if you are looking to multiply your money.

Cumulative deposits are also refereed as term deposits (recurring deposits) since herein you deposit specified amount every month and get interest +maturity amount at end of the term. You may opt for cumulative deposits when you want to regularly (monthly, quarterly, etc) deposit a fixed amount.

In a fixed deposit, you deposit a given amount for a predetermined period at one go. For your information, apart from banks, a number of companies also accept fixed deposits, sometimes termed as debentures. In such fixed deposits, you may avail the option to get all or part of your investment converted into the companies' shares on maturity.

Cumulative deposit is equivalent to recurring deposit where you have the flexibility of saving whatever amount you wish at any time, and the rate of interest payable to you will remain unaffected. Under such bank account, you are required to deposit in the multiples of Rs 5 or Rs 10.  The tenure of this deposit may vary from 1 to 5 years with the rate of interest depending on the particular period. Recurring or cumulative deposit is better than savings bank account as you get higher rate of interest in the former, in fact it is as beneficial as a fixed deposit account. Many banks offer such deposit accounts to promote the habit of saving among people. ICICI Bank offers one such product called iWish to investors looking for flexible investment amount every month.

So, now you know the comparative benefits of both cumulative deposits and fixed deposits. You can decide to go for either of them as per your need. You may do well to approach some branch of the bank near your place of residence to know the options of both cumulative deposits and fixed deposits and their respective terms and conditions.

How Axis Bank FD Rates is better than other bank's Fixed Deposit

Axis Bank is a leading banking institution. It offers a wide range of fixed deposit schemes for different durations with several advantages over fixed deposits of other banks:

Axis offers simple reinvestment fixed deposits at competitive interest rate which can go as high as 8.5 or 9 per cent depending upon the tenure of the deposit (See the table below). This rate is 0.27 per cent higher than the average 8.73 offered by other banks.  It is just 0.36 per cent lower than the highest rate.

These deposits can be opened with a minimum investment of Rs 10,000. Thereafter, you can make additions to your deposit in multiples of Re 1. If you do not want to lock your money for a long duration, you can choose as low as six months or even less as the tenure of your fixed term deposit.

Axis Bank FD Rates on term deposits with maturity is in between 14-29 days at 8 per cent, while in case of 7-14 days the interest rate is 7.5 per cent on bulk deposits above Rs 1 crore.

Axis Bank also has a very customer-friendly method of calculation of interest on your fixed deposits. It calculates interest on a quarterly basis on fixed deposits with tenure of six months& above.

As a Fixed Deposit holder, you can opt for automatic rollovers on maturity (for both the principal and interest). You can select this option in the Account Opening Document (AOD).

Under the ‘Rollover only Principal’ option, only the principal amount of your fixed deposit is rolled over. The interest is either credited to your designated account or paid out. Under the ‘Rollover Principal and Interest accrued in Reinvestment Deposit scheme’, you get both the deposit and the interest accrued for the same tenure at the interest rates applicable on the maturity date.

You have the flexibility to choose periodic interest payments on a quarterly basis, wherein interested is calculated and paid on quarterly rests. You also have the option of premature withdrawal of your deposit any time you wish, you will get interest payment for the period for which the deposit is maintained with the bank at the rate applicable for such period.

But the interest payment on your fixed deposit is subject to tax deducted at source (TDS) as per the provisions of the Income Tax Act. TDS is deducted on the basis of the total interest projected on the aggregate of fixed deposits of the customer, for the financial year.

There is no premature withdrawal penalty on NRE Term Deposits too.

As for other advantages, the interest that you earn on Axis Bank fixed deposit during the previous quarter is added to the principal for calculation of interest. In other words, fixed deposit interest rate on this aggregate amount is calculated every quarter. If the tenure of your fixed deposit schemes is below 6 months, it earns simple interest.

Given the above advantages, it seems fixed deposits offered by Axis Bank is a better option than that offered by most other banks. For one year fixed deposit Axis Bank offers 9% returns and for 6 months, the interest is 8.75%

Things to Consider Before Investing in Fixed Deposits

Fixed deposits have traditionally been one of the most popular investment options because they guarantee you good returns. Moreover, you are also able to ensure that your savings are safe throughout the tenure of these deposits. The interest rate on these deposits is also a lot higher than your regular savings accounts. You can use the FD Calculator to know more about the interest you are going to get on the deposit from a particular bank. It helps you make a wise decision when you have to choose between fixed deposit options from several banks.

But the interest you get cannot be the only factor you bear in mind when investing in fixed deposits. There are several considerations that have to be taken into account to ensure that you get the most out of this stable and lucrative investment option. 

●     You have to realize fixed deposits up to Rs. 1 lakh are backed by deposit insurance. Hence it’s a good idea to have a few FDs with principal up to Rs. 1 lakh rather than have a lump sum amount into one FD.

●     One worry many investors have is that they might lock their investments on what could be lower interest rates for long durations. To combat that, you can firstly use the FD Calculator to make sure you are making the best possible choice. You can then divide your investments into smaller amounts that can be invested in FDs of varying tenures.

●     When you lock in an FD you are better off choosing one that compounds the interest in a shorter time span. Usually quarterly compounding interest FDs should be given precedence.

●     It’s also important to remember that senior citizens get slightly higher interest rates on FDs for the same amount of time.

●     There are many different financial institutions and cooperative societies that offer fixed deposit schemes along with reputed banks in the country. It makes it imperative to know more about the organization you are going to invest in and its credibility, as well. It will ensure that you are making a safe and sound investment decision with your hard earned money.

●     FD Calculator is a smart, simple and convenient option for you to pick the best fixed deposit option available in the market today. Choosing between hundreds of fixed deposit schemes from various banks and financial institutions can seem daunting. That’s the reason several consumers opt for the first fixed deposit option that comes their way. It can be a decision that costs you dearly, especially since there’s no reason for it when you have these calculators to rely on.

●     There are fixed deposit options that can bring you tax saving benefits at the end of the year. Deposits of up to Rs. 1 lakh kept for a period of over five years can bring you substantial tax saving benefits. Hence if that’s one of the aims behind your investments then it makes sense to opt for these FDs.

FD Calculator can give you a fair idea about interest rates, but there are few other factors that you have to think about when investing in FDs.

Best fixed deposit schemes from SBI

Most people do not venture into FDs because of the fear that when they have a sudden need for money, they may not be able to access it due to the rigidness of the scheme. Many banks now consider these aspects and design fixed deposit product that addresses all your concerns. When banking is moving to highly customer friendly ground, never let your money just sit in a savings account that offers very less interest. Let’s see here how the Fixed Deposit schemes offered by State Bank of India can help you in achieving your financial goals.

About SBI

State Bank of India is the largest financial institution in India. It is a government-owned corporation and a multinational financial institution, which has become synonymous with the word ‘trust’.  For any Indian, SBI would be a name that comes first to mind whenever he thinks of investment options.

How Fixed Deposit Schemes of SBI helps you?

There are several types of fixed deposit schemes offered by SBI. In Case of SBI FD Rates, Each one has its own features in terms of interest rates and returns. Read More

For Parents

If you want to save for the future of your children, a fixed deposit can be the ideal kind of investment. SBI offers junior savings plan that are built to suit exactly the needs of parents. You will not have to worry about education funds once your child grows up. You can keep adding to the deposited amount through roll over facilities. As you keep adding to the deposit amount the rate of interest also increases considerably. You can further link the interest earned from the FD to a savings account. The interest earnings can take care of your additional expenditure or become another savings option for your child.

For the Retired Community

Fixed Deposit is a great way to plan your retirement. If you plan smartly and put away a certain amount of money throughout your employment years it will come in handy during retirement.  If you do not work for a company that gives pension, investing in Fixed Deposit is an ideal retirement plan. By the time you retire the money that you have saved as Fixed Deposit will earn enough interest to take care of your monthly expenditure. You can spend the rest of your retired life with peace of mind with the monthly interest gaining from your FD.

Middle aged Professionals

Professionals can take advantage of both short term and long term Fixed Deposit schemes offered by SBI. Investing in FD not only offers you higher returns, but helps you for your long term and short term financial goals like purchase of property, children’s education and marriage.

The best way to maximize the benefits of FD is to choose a longer tenure. Also one should allow the interest to be accumulated in their account, which is a sure shot way of increasing your savings systematically.

Fixed Deposit schemes offered by SBI

Tenure	General Interest Rates (w.e.f. 18.02.2014)	Interest Rate for Senior Citizens (w.e.f. 18.02.2014)
7 days to 90 days	7.5	7.5
91 days to 179 days	7.5	7.5
180 days to 210 days	7.0	7.0
211 days to less than 1 year	7.5	7.5
1 year to less than 2 years	9.0	9.25
2 years to less than 3 years	9.0	9.25
3 years to less than 5 years	8.75	9.0
5 years and up to 10 years	8.50	8.75

BankBazaar.com is the best platform to understand the FD schemes offered by SBI and the various benefits associated with it.

Top Banks offering loan against FD

One of the biggest advantages of investing in bank fixed deposit accounts is the easy availability of loans against fixed deposits. Unlike a lot of other investment options that need to be nullified when faced with a financial crunch, fixed deposits allow users to avail quick loans as high as 90% of their fixed deposit value. This not only increases the liquidity offering of the investment but also makes sure that the investment remains untouched and continues to compile interest for the loan tenure. Loans against fixed deposit accounts are structured similar to bank overdrafts although different banks have different rules for offering loans against fixed deposits.

Overview of Loan against Fixed Deposits:

Almost all private and public sector banks offer users the options to avail loan facility against their fixed deposit investments. The banks however have fixed certain minimum period for fixed deposit investments to be in place before loan requests can be facilitated. The period of minimum investment varies from bank to bank and the bank is the final decision making authority in case of any requests from the fixed deposit account holders. For example some banks like HDFC bank usually offers loans only after a minimum six month period from the date of opening the fixed deposit account. Public sector banks like State Bank of India or Punjab National Bank or PNB however do not have any such restrictions and loans against fixed deposits can be requested the very next day.

Depending on the account type of the fixed deposit, loan facility is available for against all deposits including NRE / NRO / FCNR while still retaining ownership. However once a loan is sanctioned against a fixed deposit account, deposits cannot be prematurely withdrawn. For NRE and NRO fixed deposit accounts, 90% of the deposit amount is eligible as loan or overdraft limit. In case of an FCNR fixed deposit account, 70% of the deposit amount is available as loan. The Bank is the final authority on deciding the quantum of the loan for any fixed deposit account.

Interest Rate and Loan Processing Fee: 

Interest rate for loans against fixed deposits is usually 2 to 3% higher than the interest rate being offered for the underlying fixed deposit. For example if an individual has a fixed deposit of Rs. 1 Lakh earning a rate of interest of 9% per annum and taken a loan against the fixed deposit she or she will have to repay an interest rate of 11 to 11.5% which is 2 to 2.5% higher than the interest received through the fixed deposit.  Most banks do not charge any processing fee while offering loans on fixed deposits. This is mainly because of secured nature of the loan. Some banks on the other hand have a policy of charging a small loan processing fee for every fixed deposit loan request. It is recommended to check with your bank about any such fee before opening a fixed deposit account. There is however no foreclosure fee or any extra charges in case a user decides to pay back the loan before its tenure or foreclose the loan. 

Different Types of interest rate in Fixed Deposits

One of the most rampant types of investment in India is the Fixed Deposit. It enables one to invest his/her funds for a stipulated period of time with a financial institution at a particular rate of interest. FDs can be of 2 types –

●     Issued by a bank or a NBFC that is regulated by the Reserve Bank of India

●     Issued by a Corporate looking to raise funds from the ‘open’ market

While there are variations in the rates of interests paid against FDs issued by banks and corporates, the latter usually pay a superior rate due to the fact that they carry more risk as compared to bank FDs, and they lack the aspect of easy liquidity generally implied in the former.

Types of interest rates for FDs

At the base level, FD interest rates can either be ‘Fixed’ or ‘Floating’.

Fixed Rate FDs

As understandable, fixed-rate FDs are offered at a fixed rate of interest for a specific deposit period. The investor can hereby look forward to get a definite and assured return as per the contracted rate after the tenure expires, no matter where the base rate in the market stands. The product is safe, guaranteed and built to generate a regular income within the deposit tenure.

Floating Rate FDs

Floating rate FDs are offered at a variable rate of interest for a term. SBI for instance has it on offer. A floating rate deposit, however, comes without a guarantee of sure return as the interest rate is liable to change with a change in the BR or the base rate of the bank. Hence, it is an option which should be picked only if the investor is ready to receive flexible returns. If the base rate increases the investor will gain but if it falls, he/she might wind up losing much more than a fixed-rate investment.

At higher level FD interest rates depend on the following factors –

●     Deposit period

●     Institution type

●     Deposit amount

Most financial institutions offering FDs have an FD interest calculator included in their websites whereby interest to be earned on the deposit money can be calculated easily. Some institutions might refer to the same as ‘Term deposit calculator’ as FDs are also popularly known as Term Deposits.

Depending on the tenure of the FD made, interest rates can be calculated –

●     On quarterly basis (banks in India employ quarterly compounding for calculating interest in Rupees)

●     @ simple interest (mostly seen in FDs that are made for below 6 months)

In instances of premature encashment, the FD interest rate is computed as per the rate that is applicable for actual deposit period, and a penalty may/may not be levied, depending on the institution’s policy.

It’s important to remember that at certain times when the economic scenario of the country reels under high inflation, RBI has the freedom to take up a stringent monetary policy whereby it can enhance its repo rates, that is, its lending rate for banks. In line of that, banks can also hike their loan rates and FD interest rates, both. At these times, FDs are the most lucrative form of investment with high-return and no-risk assured in them.