Senior citizen FD rates: Even small differences in interest rates can significantly impact your overall earnings, especially for long-term FDs

FD interest rate of up to 8.55%: Check which bank is offering higher interest rate on 1-year senior citizen FD, full list This list highlights banks offering the best one-year FD interest rates for senior citizens

When it comes to investment options for senior citizens, fixed deposits (FDs) often emerge as a preferred choice. Fixed returns, good liquidity, and comparatively higher safety than other investment options such as equity have made them promising investment options for traditional investors. Though we are at the end of a rate cycle, FDs still offer an attractive interest rate.

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To maximise your investment returns, it's crucial to compare interest rates offered by different banks and financial institutions. Even small differences in interest rates can significantly impact your overall earnings, especially for long-term FDs. This list highlights banks offering the best one-year FD interest rates for senior citizens.

Here is a list of banks offering highest rates on one-year FD for senior citizens

PUBLIC SECTOR BANKS
Bank	Interest rate (%)
Indian Overseas Bank	7.6
Bank of Baroda	7.35
Canara Bank	7.35
Central Bank of India	7.35
Bank of India	7.3
Punjab National Bank	7.3
State Bank of India	7.3
Union Bank of India	7.3
Bank of Maharashtra	7.25
Punjab & Sind Bank	6.8
Indian Bank	6.6
Source: Paisabazaar. Rates as on December

PRIVATE SECTOR BANKS
Bank	Interest rate (%)
Bandhan Bank	8.55
IndusInd Bank	8.25
RBL Bank	8
Karnataka Bank	7.75
YES Bank	7.75
DCB Bank	7.6
Kotak Mahindra Bank	7.6
SBM Bank India	7.55
DBS Bank	7.5
Federal Bank	7.5
Jammu & Kashmir Bank	7.5
Tamilnad Mercantile Bank	7.5
Karur Vysya Bank	7.4
City Union Bank	7.25
Axis Bank	7.2
ICICI Bank	7.2
South Indian Bank	7.2
HDFC Bank	7.1
IDFC First Bank	7
CSB Bank	5.5

Source: Paisabazaar. Rates as on December 18, 2024.

Tax rule on interest income from fixed deposit

According to the IndusInd Bank website, "The Indian government introduced Section 80TTB in the Finance Budget 2018, which allows senior citizens to claim a higher deduction limit on interest income from any bank deposits, including FDs. They can claim up to a Rs 50,000 deduction per annum, higher than the Rs 40,000 limit applicable to those below 60 years. This provision helps senior citizens retain more of their earned interest and provides them with better financial support in their retirement years. Also, if your total income is below the taxable threshold, you can submit Form 15H to prevent TDS."

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Deposit insurance for your fixed deposit
The Deposit Insurance and Credit Guarantee Corporation (DICGC) provides insurance coverage for your fixed deposits. This coverage extends up to Rs 5 lakh, encompassing both principal and interest. In the unfortunate event of bank bankruptcy, your fixed deposits are protected by this insurance up to the maximum limit set by the DICGC. This provides a degree of security for your investments.

When is a 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.

This story originally appeared on: India Times - Author:Faqs of Insurances