Among many investment tools that guarantee safety and good returns are bank fixed deposit schemes like fixed deposits (FDs). FDs have been in India since generations and many would guide others to invest in this scheme because of its no risk and guaranteed returns nature. Generally, FDs are better for senior citizens as they earn much higher returns than compared to general category. However, that’s not the only reason as FDs even give extensive tax benefits to senior citizens. 

Here’s why FDs are attractive investment for senior citizens. 

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Firstly, FDs are secure form of investment which help a senior citizen from stress of risk that are present in capital markets. So by choosing FDs, a senior will only have to make their deposits and earn interest on maturity. 

Secondly, FDs can be created at minimum Rs 1,000 and maximum Rs 1.5 lakh in a year. Thereby, they become not only affordable, but are also best for seniors looking to make lump sum deposits. Bank’s FD interest rates are same below Rs 2 crore. 

Application for FDs are also not lengthy. A senior can open an FD account at any bank they already have an account or if they wish to opt new bank. All they have to do is visit bank branch, with deposit either through cheque or cash remaining every procedure will be carried by banks. In case, you are opening FD with new bank, then you will also have to furnish personal details like Aadhaar card, PAN card and address proof.

Also, in case if there is a requirement of loans, a senior can also avail one against their FD investment made at banks. This reduces their burden on repaying loans, as FD amount is a guarantee kept with the bank. 

FD gains can be used for fulfilling responsibilities like household expenses, marriage, children's education and more. 

Tax benefits: 

Unlike normal bank FD account meant for general category, a senior citizen has the privilege to avail tax exemption of up to Rs 50,000 on interest income arising from this scheme. Also, tax benefit of upto Rs 1.5 lakh is given under section 80C of the Income Tax Act.

Let’s compare who offers best senior citizen FD rates: 

SBI - Below Rs 2 crore FD, a senior citizen will earn 7.50% rate for tenure like 1 year to less than 2 year, followed by 7.25% rate on 2 years to less than 3 years tenure, 7.20% on 3 years to less than 5 years tenure and 7.10% on maximum tenure of 5 years and up to 10 years. From 7 day tenure to less than 1 year, FD rates for this category is between 6.25% to 6.90%. 

HDFC Bank - Here for making below Rs 2 crore deposits, the bank offers 7.80% rate each on tenure starting from 1 year to less than 2 years. The rate is higher at 7.90% on tenure starting at 2 years 1 day to less than 3years. 7.75% rate is given on 3 years 1day - 5 years tenure, while 7% rate each is earned between 5 Years 1 Day to 10 years. From 7 days to less  than 1 year, interest rate varies from 4% to 7.60%. 

Axis Bank - The highest rate a senior citizen enjoys here would be 7.95% given on tenures from 1 year 25 days to 2 years < 30 months on FDs below Rs 2 crore. The rate is 7.80% on 30 months < 3 years tenure, while it decreases to 7.75% on 3 years < 5 years and to 7.50% on 5 years to 10 years tenure. A 7.75% rate is also given on tenures starting from 1 year to less than  1 year 25 days. Lowest interest rate would be 3.50% on beginning 7 days tenure. 

ICICI Bank - On less than Rs 2 crore FD, a senior gets 7.40% rate on 1 year to 389 days, followed by 7.50% rate on 390 days to 2 years tenure, 7.80% on 2 years 1 day upto 3 years, 7.75% on 3 years 1 day upto 5 years and 7.50% again on 5 years 1 day upto 10 years tenures. Lowest FD rate here is 4.50% from 7 days tenure t0 7.25% less than 1 year. 

Bank of Baroda - The bank on its website states that, branches may continue to pay an additional interest of 0.50% on domestic term deposits of less than Rs. 2.00 Crore from Senior Citizens for all tenors in terms of extant guidelines. For normal category, FD rate is 6.70% on 1 year tenure below Rs 2 crore deposits, followed by 6.85% on above 1 year to 400 days tenure and 6.80% on above 400 days and upto 2 Years. 6.70% rate is given above 2 years upto 10 years tenure. This means senior citizen rate will be higher by 0.50% given on general category.