If you happen to be over 55 years and are still using your old regular savings account, you may be missing out on special features and benefits that can only be availed with senior citizen savings bank account.
If you happen to be over 55 years and are still using your old regular savings account, you may be missing out on special features and benefits that can only be availed with senior citizen savings bank account. Here are a few key benefits of switching to a senior citizen savings account:
Higher rate on FDs: The rate of interest offered by a bank is generally the same across all types of savings accounts, including senior citizen savings accounts, where you can avail interest up to 7.25%.
However, senior citizens savings account holders can open fixed deposits at preferential rates, usually up to 0.50% more than what’s offered on a regular savings account and this allows them to avail interest as high as 9.5% on FDs. Concession on healthcare costs Most banks offer medical benefits with senior citizen savings accounts, where you can get up to 50% discount on treatments, consultation and healthcare procedures. This facility is chiefly made available to senior citizens by banks, allowing them to avail healthcare services at preferential rates.
Some banks also provide special medical cards or health cards to senior citizen savings account holders. However, make sure to go through the terms and conditions associated with this feature as banks usually have a list of hospitals, clinics, medical stores and healthcare care providers and you would be able to avail discounts only at these pre-approved healthcare institutions. Free ATM transactions Certain banks allow senior citizens savings account holders to make up to five free transactions from home bank’s ATMs and maximum of 10 free transactions at other bank’s ATMs.
Also, there are a few banks that do not charge senior citizen account holders for ATM transactions, from home as well as other bank’s ATMs. Debit card benefits Many banks offer free debit cards to senior citizen account holders, while others may levy an annual charge on debit card, which could be as high as Rs 2,500, depending on the bank and type of debit card you choose.
Senior citizen account holders can enjoy a higher withdrawal limit of up to Rs 50,000 per day and shopping limit of up to Rs 2.75 lakh. Discount on locker services A senior citizen account holder can avail discounts of up to 50% discount on locker services. Some banks also allow the senior citizen savings account holders to enjoy annual maintenance charge waiver in the first year of first demat account.
No TDS for interest income up to Rs 50,000: Under Section 80TTB, senior citizens do not have to pay TDS, if their interest income is less than Rs 50,000. TDS is deducted on the entire interest income, which includes interest earned on bank deposits (savings or fixed) and interest on post office deposits. This allows senior citizen savings account holders to avail higher tax deduction.
Also, if you do not fall under higher tax slab, but have earned more than Rs 50,000 as interest, you may avoid TDS on interest by submitting Form 15H. Do not blindly switch to savings account of the same bank; instead, shop around for options and choose well. Compare benefits and switch if you find a senior citizens savings account that offers higher benefits than what’s being offered by your existing bank account.
(The writer is head of payment products, Paisabazaar.com)