Is your pension enough to cover your needs? For many, the pension they receive is barely enough to cover monthly expenses. With old age comes higher medical costs, a greater need for assistance with daily chores, and more comfort requirements, especially when travelling.
“In such situations, capital protection and income certainty should take priority over growth,” says experts
For those who are uncomfortable with market-linked options like mutual funds or stocks, fixed deposits (FDs) offer a familiar and safer alternative. This is especially true for the older generation, who may remember FDs being introduced by the British in the 1990s.
Take the example of Mr Shukla, a 60-year-old man. He wants to open an FD of Rs 20 lakh and needs a monthly income from it to cover his daily expenses.
What should he opt for?
Mr Shukla should consider investing in high-yield bank FDs with a monthly interest payout option.
“As we’ve likely reached the peak of the current interest rate cycle, he should look for FDs with attractive yields for the longest possible tenure, ideally 10 years. This way, he can secure a higher interest income even if interest rates decline in the future,” explains experts
“For instance, an FD with a 7.5% annual interest rate and a 10-year tenure could provide Mr Shukla with a monthly income of about Rs 12,400, regardless of any changes in interest rates.”
Which banks offer the best FD rates?
Small finance banks like Unity Bank, Suryoday Bank, Equitas Bank, and others currently offer FD interest rates of 7.5% per annum or higher for a 10-year tenure. Some private sector banks, such as RBL Bank, IndusInd Bank, and Yes Bank, even offer rates above 8% per annum to senior citizens.
Take a look at what all the banks offer, according to PaisaBazaar
FD rates in August for senior citizens: Small finance banks
Here are the senior citizen fixed deposit rates for various small finance banks:
AU Small Finance Bank
Highest slab: 8.5% (18 months)
1-year tenure: 7.75%
3-year tenure: 8%
5-year tenure: 7.75%
Equitas Small Finance Bank
Highest slab: 9% (444 days)
1-year tenure: 8.7%
3-year tenure: 8.5%
5-year tenure: 7.75%
ESAF Small Finance Bank
Highest slab: 8.75% (2 years to less than 3 years)
1-year tenure: 6.5%
3-year tenure: 7.25%
5-year tenure: 6.75%
Jana Small Finance Bank
Highest slab: 8.75% (365 days to 1095 days)
1-year tenure: 8.75%
3-year tenure: 8.75%
5-year tenure: 7.75%
NorthEast Small Finance Bank
Highest slab: 9.5% (546 days to 1111 days)
1-year tenure: 7.5%
3-year tenure: 9.5%
5-year tenure: 6.75%
Suryoday Small Finance Bank
Highest slab: 9.1% (Above 2 years to 3 years)
1-year tenure: 7.35%
3-year tenure: 9.1%
5-year tenure: 8.75%
Ujjivan Small Finance Bank
Highest slab: 8.75% (12 months)
1-year tenure: 8.75%
3-year tenure: 7.7%
5-year tenure: 7.7%
Unity Small Finance Bank
Highest slab: 9.5% (1001 days)
1-year tenure: 8.35%
3-year tenure: 8.65%
5-year tenure: 8.65%
Utkarsh Small Finance Bank
Highest slab: 9.1% (2 years to 3 years; 1500 days)
1-year tenure: 8.6%
3-year tenure: 9.1%
5-year tenure: 8.35%
FD rates in August for senior citizens: Private sector banks
Here are the senior citizen fixed deposit rates for various private sector banks:
Axis Bank
Highest slab: 7.75% (5 years to 10 years)
1-year tenure: 7.2%
3-year tenure: 7.6%
5-year tenure: 7.75%
Bandhan Bank
Highest slab: 8.5% (1 year 9 months)
1-year tenure: 7.75%
3-year tenure: 7.75%
5-year tenure: 6.6%
City Union Bank
Highest slab: 7.75% (400 days)
1-year tenure: 7.25%
3-year tenure: 6.75%
5-year tenure: 6.5%
CSB Bank
Highest slab: 7.75% (401 days)
1-year tenure: 5.5%
3-year tenure: 6.25%
5-year tenure: 6.25%
DBS Bank
Highest slab: 8% (376 days to 540 days)
1-year tenure: 7.5%
3-year tenure: 7%
5-year tenure: 7%
DCB Bank
Highest slab: 8.55% (19 months to 20 months)
1-year tenure: 7.6%
3-year tenure: 8.05%
5-year tenure: 7.9%
Federal Bank
Highest slab: 7.9% (50 months; 777 days)
1-year tenure: 7.3%
3-year tenure: 7.5%
5-year tenure: 7.25%
HDFC Bank
Highest slab: 7.9% (4 Year 7 Months or 55 months)
1-year tenure: 7.1%
3-year tenure: 7.5%
5-year tenure: 7.5%
ICICI Bank
Highest slab: 7.8% (15 months to less than 18 months)
1-year tenure: 7.2%
3-year tenure: 7.5%
5-year tenure: 7.5%
IDFC First Bank
Highest slab: 8.25% (500 days)
1-year tenure: 7%
3-year tenure: 7.75%
5-year tenure: 7.5%
IndusInd Bank
Highest slab: 8.25% (1 year to 2 years)
1-year tenure: 8.25%
3-year tenure: 7.75%
5-year tenure: 7.75%
Jammu & Kashmir Bank
Highest slab: 7.5% (1 year to less than 3 years)
1-year tenure: 7.5%
3-year tenure: 7%
5-year tenure: 7%
Karur Vysya Bank
Highest slab: 8.1% (760 days)
1-year tenure: 7.4%
3-year tenure: 7.4%
5-year tenure: 7.4%
Karnataka Bank
Highest slab: 7.65% (375 days)
1-year tenure: 7.5%
3-year tenure: 6.9%
5-year tenure: 6.9%
Kotak Mahindra Bank
Highest slab: 7.9% (390 days to less than 23 months)
1-year tenure: 7.6%
3-year tenure: 7.6%
5-year tenure: 6.7%
RBL Bank
Highest slab: 8.6% (500 days)
1-year tenure: 8%
3-year tenure: 8%
5-year tenure: 7.6%
Additional rate for super senior citizens: 0.25% on all tenures
SBM Bank India
Highest slab: 8.75% (3 years 2 days)
1-year tenure: 7.55%
3-year tenure: 7.8%
5-year tenure: 8.25%
South Indian Bank
Highest slab: 7.75% (400 days)
1-year tenure: 7.2%
3-year tenure: 7.2%
5-year tenure: 6.5%
Tamilnad Mercantile Bank
Highest slab: 8% (400 days)
1-year tenure: 7.5%
3-year tenure: 7%
5-year tenure: 7%
YES Bank
Highest slab: 8.5% (18 months)
1-year tenure: 7.75%
3-year tenure: 8%
5-year tenure: 8%
FD rates in August for senior citizens: Public sector banks
Here are the senior citizen fixed deposit rates for various public sector banks:
Bank of Baroda
Highest slab: 7.75% (399 days)
1-year tenure: 7.35%
3-year tenure: 7.65%
5-year tenure: 7.15%
Bank of India
Highest slab: 7.8% (666 days)
1-year tenure: 7.3%
3-year tenure: 7.25%
5-year tenure: 6.75%
Additional rate for super senior citizens: 0.15% on tenures of 180 days to 10 years
Bank of Maharashtra
Highest slab: 7.75% (777 days)
1-year tenure: 7.25%
3-year tenure: 7%
5-year tenure: 7%
Canara Bank
Highest slab: 7.75% (444 days)
1-year tenure: 7.35%
3-year tenure: 7.3%
5-year tenure: 7.2%
Additional rate for super senior citizens: 0.10% on 444 days
Central Bank of India
Highest slab: 7.8% (444 days)
1-year tenure: 7.35%
3-year tenure: 7%
5-year tenure: 7%
Indian Bank
Highest slab: 7.75% (400 days – IND SUPER)
1-year tenure: 6.6%
3-year tenure: 6.75%
5-year tenure: 6.75%
Additional rate for super senior citizens: 0.25% on all tenures
Indian Overseas Bank
Highest slab: 7.8% (444 days)
1-year tenure: 7.4%
3-year tenure: 7%
5-year tenure: 7%
Additional rate for super senior citizens: 0.25% on all tenures
Punjab National Bank
Highest slab: 7.75% (400 days)
1-year tenure: 7.25%
3-year tenure: 7.5%
5-year tenure: 7%
Additional rate for super senior citizens: 0.30% for tenures up to 5 years
Punjab & Sind Bank
Highest slab: 7.8% (666 days)
1-year tenure: 6.8%
3-year tenure: 6.5%
5-year tenure: 6.5%
Additional rate for super senior citizens: 0.15% on tenure of 444 days, 222 days, 666 days, & 999 days
State Bank of India
Highest slab: 7.75% (444 days)
1-year tenure: 7.3%
3-year tenure: 7.25%
5-year tenure: 7.5%
Union Bank of India
Highest slab: 7.9% (333 days)
1-year tenure: 7.3%
3-year tenure: 7.2%
5-year tenure: 7%
Additional rate for super senior citizens: 0.25% on all tenures
Depositors with these banks are protected by the deposit insurance programme provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI. This insurance covers deposits of up to Rs 5 lakh per bank, including the principal and interest. “To minimise risk, Mr Shukla could spread his investment across five different banks, maximising his insurance coverage,”
How is FD interest calculated?
Banks calculate FD interest using either simple or compound interest. For tenures of up to 180 days, simple interest is typically used. For longer durations, compound interest is applied, with interest compounded quarterly. For FDs with a monthly payout option, interest is usually calculated quarterly and paid out at a discounted rate.
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