FD Watch. Attractive deposits for seniors

Banks have been on a rate cutting spree for over a year now and are unlikely to backtrack anytime soon. So, if you are a senior citizen (60 years and above) on the lookout for safe investment options, lock into some bank fixed deposits that are still attractive.

If you want some liquidity and do not want to tie up your money for too long, opt for the one- to two-year deposits. In any case, beyond a certain number of years, the rates on longer tenure deposits are not necessarily higher than those on the shorter tenures.

Best one-year deal

If you are looking for a one-year fixed deposit, go for Lakshmi Vilas Bank’s (LVB) Dhanachakra Deposit which offers 8.6 per cent per annum, the highest across comparable products. With interest computed every quarter, the yield is even higher, thanks to the compounding effect. You can invest as little as ₹100 in this deposit.

The second-best rate of 8.5 per cent is offered by Karur Vysya Bank. One-year deposits with other banks, such as Kotak Mahindra Bank, Axis Bank and DCB Bank, can fetch you 8.4 per cent. But if you’d like to earn a slightly higher rate of interest and don’t mind stretching the deposit tenure a bit, consider investing in the over one-year and less than two-years deposits of DCB Bank and LVB.

DCB Bank offers 8.6 per cent on its 13 months to less than 18 months deposit, higher than the 8.4 per cent on its one-year deposit. LVB too offers this rate on such deposits.

Apart from these, special deposits with certain banks too, can provide you equally attractive rates. For instance, you can earn 8.45 per cent on the Kuber 400-day deposit from State Bank of Hyderabad.

YES Bank’s 12-month and 10-day to 12-month and 20-day deposits too can fetch you 8.4 per cent. This is higher than the 8.25 per cent offered on its one-year and other longer tenures.

For two-year to three-year deposits, DCB Bank is a clear winner. It offers 8.7 per cent, the highest across banks.

Lakshmi Vilas Bank with its 8.6 per cent rate of interest is a close second. But, when it comes to three-year deposits, LVB, which offers 8.75 per cent, is the best option. DCB Bank offers a slightly lower 8.7 per cent on such deposits.

Beyond three years, there is no higher interest (probably only lower) to be earned from investing in deposits. Let’s take a few examples. DCB Bank offers 8.7 per cent on deposits of over three years and up to five years.

Deposits of even longer periods with the bank, however, fetch only 8.5 per cent. It’s the same at Lakshmi Vilas Bank.

Deposits ranging from three to less than five years offer 8.75 per cent and those of five years and over, 8.7 per cent, which is a tad lower.

All these deposits allow for premature withdrawal, but you are charged a penal rate of 0.5-1 per cent rate less than the applicable rate. YES Bank though, is an exception — it imposes no penalty charge on early withdrawals.

Apart from bank fixed deposits, senior citizens can also choose from the ultra-safe post office deposits. But the post office now offers an 8.4 per cent interest rate on the one-, two- and three-year term deposits and 8.5 per cent on the five-year term deposit which, though good, doesn’t beat all banks.

But the five-year Senior Citizen Savings Scheme (SCSS) offers a much better 9.3 per cent. You can deposit a maximum of ₹15 lakh only and up to ₹1.5 lakh qualifies for deduction while calculating your taxable income.

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