Investing smartly is a wise way of increasing your wealth, and what is a better financial product for FDs to do that? Now, the reason why FDs are so popular among Indians is that it offers guaranteed returns that aren’t affected by the stock market or other factors.
FDs have become a popular investment instrument among senior citizens as the interest rates on fixed deposits are high. Also, it eliminates the worry of losing capital while generating regular income.
Senior citizen FDs: Definition
For depositors over the age of 60, the best-known financial instrument is the Senior Citizen Fixed Deposits (FDs). These FDs are similar to term deposit plans but have higher interest rates. Besides earning an interest rate on fixed deposits that is up to 0.50 to 1% higher than the national average, elderly adults can take advantage of a host of other perks by opening a fixed deposit account.
One-way retirees can ensure they have a stable source of income in their golden years is through the regular interest payout option. If they need money, they can also take out a loan against the FD. In addition to the fixed deposit’s earnings, it can help retirees save money on taxes over a five-year period.
Retirees prefer fixed deposit accounts for stability, security, and peace of mind. Another benefit is that banks pay the highest fixed deposit interest rates for senior citizens than other investments.
Benefits of senior citizen FDs
Retirees can relax about their money once fixed deposits mature because interest is guaranteed. FDs have a fixed interest rate that makes fixed deposits low-risk. Investors can rest comfortably knowing their retirement assets are safe compared to other market-linked products.
Retirees can easily open fixed deposits since they’re simple and involve little paperwork. To open an FD account, go to your bank’s website or app. No paperwork is needed if the bank has done KYC.
A flexible savings plan allows seniors to withdraw interest according to their needs and finances. Investors can receive interest payments every three months, annually, twice a year, or monthly to match their pre-retirement income.
However, if you live in Singapore then you can find Singapore citizenship application from our official website.
Eligibility for Senior Citizen Fixed Deposit Scheme
To put money into a senior citizen fixed deposit scheme, you must meet the following requirements:
- The person must be at least 60 years old or 55 years with early retirement.
- A minimum deposit amount should be paid to open an account. Depending on the bank offering the deposit, this amount can be just Rs.1000.
- A senior citizen fixed deposit scheme is available to both people who live in India and people who live outside of the country.
To open an FD account for a senior citizen, you would need the following:
- Form to open a fixed deposit account, filled out and signed
- Photo identification of the person making the deposit, such as a voter’s ID card, an Aadhaar card, a PAN card, a driver’s licence, or a passport.
- Proof of the depositor’s age, such as a voter’s ID card, an Aadhaar card, a PAN card, a driver’s licence, a passport, or something similar.
- Proof of the depositor’s address, such as a voter’s ID card, an Aadhaar card, a driver’s licence, a passport, a utility bill, a rental contract, and a property deed.
Taxation of Senior Citizen FDs
If a senior citizen fixed deposit earns more than 50,000 in interest in a fiscal year, the bank or other financial institution takes a TDS of 10% from the interest income. If, on the other hand, a senior citizen doesn’t fall into the tax bracket and the interest earnings aren’t taxed, they can give Form 15H to the bank or other financial institution to stop TDS from being taken out of the interest earnings.
Form 15H should be sent to all banks and financial institutions where the senior citizen has a deposit. But if you have more than one deposit with the same bank or financial institution, you can send a single Form 15H listing all of your deposits.
The interest rates on fixed deposits and the security of return make this financial product popular among senior citizens. However, before investing, it is wise to learn more about the particular deposit plan and its terms and conditions to avoid any hassle in the future.