Senior Citizen FD: These days the rate of bank FD is out. After the continuous increase in the repo rate, banks have also increased their interest rates. Senior citizens have got relief from FD interest reaching 8 percent.
Let us tell you that this is the first time after 3 years when senior citizen FD rates of most banks have gone above eight percent. In about three years, senior citizens are getting returns of 8% and above on Fixed Deposits. People are running around the banks to review the interest of their existing FDs. Back-to-back repo rate hikes by RBI have finally brought relief to senior citizens who are dependent on interest for their survival.
People re-investing after breaking FD
The rates were reduced to 5.5% due to excess liquidity in the banking system during the Corona pandemic. Now it is a great opportunity to invest in FDs with some private banks offering up to 8% and public sector banks offering over 7.5% interest.
After increasing the interest rates, people are rebooking it again at the new rate by breaking the FDs already done at low interest. They are getting benefit of 20 to 30 thousand from this. Last month, the government capped the returns on the Senior Citizens Savings Scheme (SCSS) to 8%. The government had slashed the interest rate on the Senior Citizens Savings Scheme to 7.4% during the pandemic. However, the difference between SCSS and bank FD has narrowed after the interest rate hike. Some banks are offering even higher rates for super senior citizens or those above the age of 80 years.
Where is the interest
Union Bank of India offers 75 basis points over its regular rate for super seniors. 700-day senior citizens are getting 8% interest. Punjab National Bank is offering 80 bps more interest than the regular rate to Super Senior Citizens. The highest return is 8.1% on a 666 day deposit. Indian Bank offers 25 bps more.
Is it okay to break old FD and get new FD done?
Breaking existing fixed deposits can be beneficial for some customers who have invested in FDs and their bank does not levy penalty for premature withdrawal. If no penalty is being charged then the interest on the earlier FD will reduce with the actual tenure. Another thing to note is that you may need to visit the bank branch to break the FD. FDs can be broken online only if they are booked using netbanking. Where certificates have been issued to customers, the depositors need to approach the bank for premature withdrawal.
Increased interest on savings schemes
RBI has increased the interest rate on its floating rate savings bonds from 7.15% to 7.35%. After this, the interest of National Savings Certificate has become 7%. Apart from banks, NBFCs are offering attractive returns. HDFC’s “Neelmani” deposit scheme offers an interest rate of up to 7.6%. For senior citizens who are also shareholders and use netbanking, the returns are less than 8%. Bajaj Finance, on the other hand, offers up to 7.95% interest on three-year deposits to senior citizens.
