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 But in a fixed deposit, the money invested by you cannot be withdrawn without incurring losses, as compared to a recurring deposit or a demand deposit, before maturity.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%