Why are Fixed Deposits a Good Investment Option for Senior Citizens?


A fixed deposit, also known as term deposit, is one of the most popular investment instruments in India. Fixed deposits come with little to no risk when invested with a reputable bank or NBFC, this coupled with decent and consistent returns makes FDs an incredibly attractive investment option. This is especially true in the case of senior citizens or retired folks as along with assured payouts, most banks and NBFCs offer special interest rates to senior citizens.

Why Choose Fixed Deposits

Fixed deposits are a great option for anyone who cannot afford to take risks with their funds and prefer assured returns on their investments. This is why FDs are one of the most popular investment options for senior citizens, FDs provide a consistent income while ensuring that the investments are safe and sound.

Most financial institutions offer higher interest rates for senior citizens. Currently, senior citizen FD rates in banks and NBFCs range from 2.55% to 8.25% p.a. Apart from FDs, there are other attractive savings schemes available in the market for senior citizens.

One of the most popular options is the Senior Citizens Savings Scheme (SCSS). The Senior Citizens Savings Scheme (SCSS) is very similar to a bank FD, the only difference being that it is a retirement benefits programme that is backed by the Indian government. Senior citizens residing in India can invest into this scheme, individually or jointly. Subscribers of the Senior Citizens Savings Scheme (SCSS) will get regular payouts in addition to tax benefits.

Features and Benefits of FDs

Here are some features and benefits of investing in an FD that make FDs an ideal choice for senior citizens:

  • High Interest Rates

FDs offer not only high rates of return, but also consistent returns. This can be extremely beneficial to senior citizens as they can use their FD returns as a regular source of income. With senior citizen FD rates ranging from 2.55% to 8.25% p.a., FDs are a great choice for senior citizens looking to safely park their funds and generate consistent returns.

  • Tax Benefits

While tax benefits are dependent on the kind of FD you choose to invest in, it is wise to assume that most FDs come with some kind of tax saving benefit. For example, the principal amount deposited under the Senior Citizens Savings Scheme (SCSS) is eligible for a tax deduction of up to ₹1.5 Lakh per annum under section 80C of the Income Tax Act, 1961.

  • Flexible Tenor

With an FD, you may choose your preferred tenor in consideration with your financial goals and priorities. Depending on your financial goals, you may choose between a tenor of 8 days to 10 years. In case of an emergency, maNy banks allow premature withdrawal of FD for a small penalty amount.

  • Loan Against FD

In case of an emergency, instead of having to withdraw your FD prematurely which would typically cost you a percentage of your principal amount and interest earned, you can opt for a loan against your FD.

  • Assured Returns

Unlike with other types of investments, you can rest assured that you will receive your stipulated interest payouts on a monthly, quarterly, yearly or lump-sum basis. This can be especially beneficial to senior citizens as FD interest payouts can serve as a regular source of income.

FD Rates for Senior Citizens

Senior citizens get a higher rate of interest in most banks, they typically earn anywhere between 0.25% to 0.75% higher than regular citizens. Let’s take a look at the prevailing senior citizen FD rates in leading banks and NBFCs in India and compare it with that of regular citizens to get a better understanding of the special interest rates offered to senior citizens.

Bank/NBFC Regular Citizen FD Rates (below 2 Crores) Senior Citizen FD Rates (below 2 Crores)


Mahindra Finance 6.25%-7.25% 6.50%-7.50%
PNB Housing Finance


6.50%-7.25%    6.75%-7.50%
SBI 2.90%-5.65%




HDFC 2.75%-5.75% 3.25%-6.50%




Kotak Mahindra Bank 2.50%-6.10%    3.00%-6.60%   
Bajaj Finance 6.35%-7.50% 6.60%-7.75%

*Indicated figures are accurate as of 03/10/2022.


There are a number of investment options available to senior citizens. These include FDs, RDs and Senior Citizens Savings Scheme (SCSS). With current senior citizen FD rates going as high as 7.75% p.a., FDs are the ideal investment choice for senior citizens. In addition to higher rates of return, FDs also provide a risk-free investment choice and consistent returns.

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