For senior citizens, fixed deposits (FDs) can be a popular option for earning regular and relatively stable returns.
The good news is that many banks offer higher FD interest rates to senior citizens than they offer to regular customers.
In some cases, the extra benefit can be as much as 0.50 percentage points.
Some small finance banks are currently offering senior citizens interest rates of up to 8.50% on selected FD tenures.
Suryoday Small Finance Bank Offers 8.50% Interest
Small finance banks often offer higher FD rates compared with many traditional banks.
Among them, Suryoday Small Finance Bank is offering senior citizens an interest rate of up to 8.50% on 5-year fixed deposits.
This makes it one of the higher FD interest rates currently available for senior citizens, although investors should always check the latest rate and applicable conditions before booking an FD.
Other Small Finance Banks Offering High FD Rates
Suryoday is not the only bank offering attractive rates.
Here are some other small finance banks offering higher interest rates to senior citizens on 5-year FDs:
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 FDs below Rs 3 crore, according to the information provided.
For senior citizens looking for higher returns, these rates may look attractive. However, the final return will depend on the investment amount, tenure and the bank’s applicable FD rules.
What About TDS on FD Interest?
Senior citizens should also keep an eye on the tax deducted from their FD interest.
If the interest earned from bank FDs exceeds Rs 1 lakh in a financial year, TDS may be deducted at 10%, subject to applicable tax rules.
If the customer does not have a PAN, the TDS rate can be 20%.
The TDS deducted is not necessarily the final tax you have to pay.
Eligible taxpayers can claim the deducted amount as a refund or adjust it against their total tax liability while filing their Income Tax Return (ITR).
Before Booking an FD, Check These Things
A high interest rate can be attractive, but senior citizens should not look at the rate alone.
Check the FD tenure, premature withdrawal rules, deposit insurance coverage, applicable tax rules and whether the advertised rate applies to your investment amount.
Rates can also change, so it is important to confirm the latest rate directly with the bank before investing.
