Top 5-year FD rates for senior citizens : You can get interest up to 8% on these fixed deposits; check full list of banks

Your regular source of income will end when you retire. Therefore, financial planning is essential to maintain your lifestyle. The two main things you should focus on while investing as an older adult are low risk and guaranteed profits. In India, fixed deposits are preferred methods to save money. FDs are considered a reliable way to increase your investments as they provide fixed returns. Fixed deposits provide stability and security in contrast to stock market investments, which are susceptible to changes in market conditions.

FD interest rates: Get up to 7.4% interest on five-year FDs; Check full list here

What is a senior citizen fixed deposit?

According to the DCB Bank website, “Individuals 60 years of age and above are eligible as senior citizens as per the guidelines of Reserve Bank of India (RBI) for bank deposits. Senior Citizen Fixed Deposit is designed specifically for such individuals so that they can enjoy the extra benefits in their golden years. The interest rates on Senior Citizen Fixed Deposit are usually higher than the regular Fixed Deposit. It offers better returns and financial stability.”

When is premature withdrawal penalty on FDs not applicable?

According to the Bank of India website, “In case of the deposits which have been prematurely closed for renewal for a longer period than the remaining period of the original contract tenure, there shall be “No penalty” for the premature withdrawal irrespective of the amount of the deposit. No penalty for the premature withdrawal of Term deposits due to death of depositor/s.”

Some banks such as Indian Bank and RBL bank do not charge senior citizens for premature withdrawal. Senior citizen bank customers should check with their bank before applying for premature withdrawal.

Top banks offering FD interest rate of 7.5% and above on 5 year fixed deposit for senior citizens

Bank Name	FD interest rate
Axis Bank	7.75
DCB Bank	7.9
Federal Bank	7.75
HDFC Bank	7.5
ICICI Bank	7.5
IndusInd Bank	7.75
Karur Vysya Bank	7.4
RBL Bank	7.6
YES Bank	8
State Bank of India	7.5

(Source: Paisabazaar.com
Interest rates as of 18th December 2024)

TDS, or Tax Deducted at Source on senior citizen FDs

The Income Tax Act of India, 1961, imposes taxes on interest earned on fixed deposits. The individual's income tax slab will determine the actual tax rate on FD interest. For senior citizens, i.e. people above 60 years of age, TDS on interest on Fixed Deposit is levied if the interest income exceeds Rs 50,000 in a financial year. TDS on FD is deducted at a flat rate of 10% rate in a given fiscal year where PAN details are available. The rate of TDS on Fixed Deposit interest increases to 20% if the PAN details of the investor are not available.