Certain time-tested investments offer security and stability today, where new investment options emerge frequently. One such reliable investment is Fixed Deposit. It is a financial product provided by banks that offers customers better interest rates than Regular Savings Accounts.
When you open an FD, you deposit a sum that is locked in for a period of your choice, with durations ranging from seven days to 10 years. You also get attractive Fixed Deposit interest rates from banks, which remain constant until maturity. An FD calculator lets you know the returns beforehand, thus helping you plan your investment effectively.
Key benefits of FDs for senior citizens
FDs are trusted traditional investment options for several years. Their key benefits for senior citizens include:
- Higher interest rates
The biggest benefit of FDs for senior citizens is banks’ higher interest rates. These are usually higher than regular rates, helping senior citizens earn more money. Often, they can be up to 0.5% higher, leading to extra income.
- Safe investment options
Today, multiple investment options help you grow your money. However, many of these are subject to market risks, thus posing some risk. For senior citizens, it is important to have a secure investment to multiply their funds. FDs meet this need by offering guaranteed returns and tax exemptions, making them ideal for those with a low-risk tolerance.
- Regular income stream
Post-retirement, having a regular supplementary income becomes essential. FDs for senior citizens provide this benefit through regular interest payouts. You can choose the frequency of these payouts, like monthly, quarterly, half-yearly, or yearly, depending on what suits your lifestyle best. This flexibility ensures a steady income stream, allowing senior citizens to live stress-free lives.
- Tax benefits
Tax benefits remain a significant advantage for senior citizens on FDs. Section 80TTB of the Income Tax Act provides tax benefits on income earned through Fixed Deposit interest rates at banks, post offices, or cooperative banks. You can claim up to Rs. 50,000 deductions on interest income. This enhanced tax exemption provides additional financial relief and makes FDs an even more attractive option for senior citizens.
They can also open a Tax-Saving FD, which enables the depositor to claim Income Tax exemption under Section 80C of the Income Tax Act on investments of up to Rs. 1.5 lakh. The lock-in period is five years, and the interest earned is taxable and deductible at source. Premature withdrawals, Loans, or Overdraft facilities are unavailable for Tax-Saving FDs.
There is no auto-renewal facility. You can opt for flexible interest payouts or reinvest the principal amount.
Conclusion
You can open a Senior Citizen FD by visiting the bank personally or online. Most banks also accept online applications where you can fill in the details in the FD opening form and submit it. The online application method saves time and paperwork.
