Many banks and finance companies offer special FD schemes to senior citizens. These FDs are usually known as senior citizen FD schemes and offer a tad higher interest rate to senior citizens. Therefore, if you are a senior citizen then you can surely benefit from such FD schemes.
As a senior citizen you must invest in instruments that offer better returns and flexible investment methods. Also, you must see to it that the instrument is stable as you might rely on your savings entirely after retirement. FDs are risk-free instruments that come with flexible investment options. However, to earn good returns you must invest in senior citizen FDs that offer higher FD rates.
Here are some of the key features of senior citizen FDs that might help you evaluate your options before investing:
Eligibility & FDs for NRIs
To be eligible for a senior citizen FD scheme, you must be at least 60 years old. Some banks might allow people who are older than 55 to invest in senior citizen FDs in case they have opted for early retirement. However, these rules vary from one financier to another and therefore you must confirm your eligibility before planning to invest in such FDs.
Some finance companies like Bajaj Finance allow even NRI senior citizens to open a fixed deposit account by using an NRO account. Also, a minimum of Rs. 25000 is enough to invest in its FDs irrespective of whether you are a non-resident Indian or not. Moreover, an additional FD rate of 0.25% is offered to senior citizens.
Interest payouts
You would like to have more options at your hand while investing in a senior citizen FD scheme. For instance, it is better if a financier allows you to choose non-cumulative FD that offers periodic interest payouts. Bajaj Finance enables you to opt for monthly, quarterly, six-monthly, or yearly interest payouts on investing in its non-cumulative FDs. You can use these payouts for managing your regular expenses.
Higher interest rate
Most financiers do offer a better FD interest rate to senior citizens but if the base rate itself is not high enough then this additional interest rate doesn’t make a huge difference in returns.
The bank FD rates range between 4 to 5.5% at present. Therefore, it is better that you search for a senior citizen FD scheme that provides a better FD rate. The senior citizen FD rates of Bajaj Finance FD are up to 7.25%. This is high enough to provide substantial returns upon maturity and the higher rate of interest would translate to better periodic payouts as well.
Suppose that you are thinking of investing Rs. 20, 00,000 in an FD for 5 years. Now, private banks offer interest rates up to 6% whereas government i.e. public banks are currently offering FD rate up to 5.5%. The below table shows the difference of returns when you invest in a Bajaj Finance FD instead:
| FD Name | Amount | Tenor | Interest Rate | Interest Gains | Final Maturity Amount |
| Bank FD (Private) | Rs. 20,00,000 | 5 years | 6% | Rs. 6,93,710 | Rs. 26,93,710 |
| Bank FD (Government) | Rs. 20,00,000 | 5 years | 5.5% | Rs. 6,28,133 | Rs. 26,28,133 |
| Bajaj Finance FD | Rs. 20,00,000 | 5 years | 7.25% | Rs. 8,38,027 | Rs.28,38,027 |
You can see that the difference is huge enough to make a good difference in the maturity amount. Moreover, its FDs are considered to be safe and they have been rated highly by credit rating agencies like CRISIL and ICRA for being a stable investment option. The options like loan against FD help you to cover an unprecedented situation wherein you need funds urgently. Also, non-seniors can earn 0.10% extra interest rate by opening a term deposit account through an online FD form.
Senior citizens need to be cautious while investing as they have a minimal income source. They rely heavily on their investments and therefore, they need to invest in fixed deposit schemes as they are stable and offer better returns. Some financiers are offering higher FD rates to senior citizens.
However, if the base interest rate is only not high enough then the additional interest rate is of no use. Bajaj Finance FD offers a high interest rate and an additional FD rate of 0.25% ensures that you earn sufficiently at maturity. You can even opt for periodic interest payouts by depositing your corpus in its non-cumulative FD. There is no risk to your investment if you choose its FD plans as Bajaj Finance FD has received high credit ratings from CRISIL and ICRA.