Senior citizens should put some of their savings into fixed deposits, which provide liquidity and interest income regularly.
Seniors who enjoy investing in fixed deposits are in for a treat. According to BankBazaar data, private and public sector banks are offering interest rates as high as 8% on three-year fixed deposits for senior citizens. The elderly should put some of their savings into fixed deposits, which provide liquidity and interest income regularly. The savings can be used to create an emergency fund. Although bank FD interest is taxable, a lower tax bracket for most senior citizens ensures that tax liability is minimal.
Investors prefer to park their money in leading public sector banks and private banks’ fixed deposits, according to Reserve Bank of India data for fiscal year 2022. According to the data, FD investment in leading public sector and private banks accounts for 76 percent of total bank deposits. This is despite the fact that smaller private banks and small finance banks are offering higher interest rates in order to attract new deposits.
The interest rate of the top 20 banks (according to their total term deposit position reported with the RBI as of March 31, 2022) is the key parameter for identifying these banks. Data as of October 20, 2023, as published on the respective banks’ websites. Banks with no data available on their websites were not considered. The data includes a 3-year deposit of senior citizens (60-80 years old) for less than Rs 1 crore. The value is computed using quarterly compounding of interest. The minimum investment amount varies according to the type of term deposit account.
For senior citizens, YES Bank and IndusInd Bank offer 8% interest on three-year fixed deposits. It has the lowest interest rates among private banks. In three years, a Rs 1 lakh investment grows to Rs 1.27 lakh.
Senior citizens can earn 7.75 percent on three-year fixed deposits with the Bank of Baroda. It has the lowest interest rates among public sector banks. In three years, a Rs 1 lakh investment grows to Rs 1.26 lakh.
Senior citizens can earn 7.60 percent on three-year fixed deposits with Axis Bank. In three years, a Rs 1 lakh investment grows to Rs 1.25 lakh.
Senior citizens can earn 7.50 percent on three-year fixed deposits with HDFC Bank, ICICI Bank, and Punjab National Bank. In three years, a Rs 1 lakh investment grows to Rs 1.25 lakh.
Canara Bank offers 7.30% interest on three-year fixed deposits for senior citizens. In three years, a Rs 1 lakh investment grows to Rs 1.24 lakh.
Senior citizens can earn 7.25 percent on three-year fixed deposits with the Bank of India. In three years, a Rs 1 lakh investment grows to Rs 1.24 lakh.
Senior citizens can earn 7.10 percent on three-year fixed-rate deposits at Federal Bank. In three years, a Rs 1 lakh investment grows to Rs 1.24 lakh.
The Deposit Insurance and Credit Guarantee Corporation (DICGC), an RBI subsidiary, guarantees fixed deposit investments of up to Rs 5 lakh.
