How are Fixed Deposits beneficial for senior citizens?

April 8, 2024

With the world around us changing so quickly, new investment options are always being introduced in the market. However, some stood the test of time for specific and entire generations. One such option is the Term Deposit Account. It is particularly useful for senior citizens who prefer taking no risks at later stages of life.

A Fixed Deposit is a financial instrument offered by banks in India. When you open one, you deposit a certain sum with the bank, which gets locked for a fixed duration. The deposited amount grows at a steady interest rate that is higher than those offered by Savings Accounts. You also come across specific FDs for senior citizens or those over 60 years old.

How does it help them?

  1. Higher interest rates

Most banks offer special interest rates on FDs geared towards this age group. These rates almost always tend to be higher than the regular interest rates, which means senior citizens can take advantage of this. These interest rates may be as much as 50 basis points higher than usual, which translates to higher earnings.

  1. Safe space for financial growth

There are plenty of investment options available today to help your money grow. Since many are market-linked, they are subject to fluctuations and risk. As a senior citizen, having an investment option away from fluctuations and guaranteeing returns can be highly worthwhile. Fixed and Recurring Deposit are ideal for low-risk investors and others new to the investment world.

  1. Provides regular income

Even with the most well-planned savings, post-retirement life often requires regular supplementary income. With FDs, you can receive such income through regular interest payouts. You can also select the frequency of this payout, which can range from monthly to quarterly to half-yearly to yearly.

  1. Tax exemptions

Another useful benefit of opening an FD for senior citizens is their tax treatment, which differs significantly from regular taxation. Regular FDs offer tax exemption on interest earned of up to Rs. 40,000. As per the Union Budget 2018-2019, senior citizens can now claim tax exemptions for interest earned on FDs for up to Rs. 50,000.

  1. Loan against FD

FDs for senior citizens can offer benefits other than interest payouts, high returns, and tax-saving advantages. Suppose a need ever arises for you to raise financial assistance. In that case, you can even claim a Loan against your current FDs to access a more liquid and immediate financial option. This facility is available on most Banking apps.


The first step is finding an FD that provides you with the benefits you need and aligns with your goals. As a senior citizen, you get a comprehensive idea of the various advantages offered. By downloading the app, you can research and compare several banks’ charges and interest rates on your smartphone.


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