Fixed deposits or time deposits are a secured way to earn higher interests as they generally give higher interest rates than those provided by savings bank deposits. Especially for senior citizens, after the increase in exemption limit on FDs to Rs 50,000 from the current year, such deposits have become a lucrative option.
Apart from banks, Post Office also offers time deposits. Although Post Office offers highest interest rates for senior citizens, but you cannot withdraw money before one year.
Post Office: Post Office has the advantage of having a large network and also offers the highest interest rates for senior citizens on its Senior Citizen Savings Scheme (SCSS). However, if you are a senior citizen, you should keep in mind that you can’t break your Post Office FD before completion of one year. Moreover, premature closure is allowed after one year on deduction of an amount equal to 1.5 per cent of the deposit and after two years 1 per cent of the deposit. For those who are not senior citizens, the rate is also quite high, but unlike banks, very short term deposits are not allowed. Launch of ATMs and India Post Payment Bank will make money transactions through Post Office more convenient.
The following table shows the current rates of fixed deposits of Post Office.
Post Office time deposit interest rates from January 1, 2018 | ||
| Period | Normal Rate | Rate for SCSS |
|---|---|---|
| 1 year | 6.60% | – |
| 2 years | 6.70% | – |
| 3 years | 6.90% | – |
| 5 years | 7.40% | 8.30% |
State Bank of India: The SBI has the largest banking network in India. For persons looking for short-term FDs and for FDs over 5-year term, the interest rates offered by the public sector bank is quite attractive. Apart from wide network, the goodwill and government backing have made the SBI FDs attractive and secure.
HDFC Bank: Good financial health of HDFC Bank makes investors confident of putting their money in the bank. The bank also gives good interest rates on FDs with a tenure of 1-3 years. The interest rate offered by HDFC Bank for the term of 1-2 years is highest among the SBI, ICICI Bank and Post Office.
ICICI Bank: As the largest private sector money lender, ICICI Bank has a large customer base. The bank also provides a wide choice of term and interest rates for very short-term FD investors. For 5-year deposits, ICICI Bank offers the highest interest rate after Post Office.
The following table shows the current rates of FDs of State Bank of India (SBI), HDFC Bank and ICICI Bank.
| Period | State Bank of India | HDFC Bank | ICICI Bank | |||
| Normal rate | For Sr citizens | Normal rate | For Sr citizens | Normal rate | For Sr citizens | |
| 7 – 14 days | – | – | 3.50% | 4.00% | 4.00% | 4.50% |
| 15 – 29 days | – | – | 4.25% | 4.75% | 4.25% | 4.75% |
| 30 – 45 days | – | – | 5.75% | 6.25% | 5.50% | 6.00% |
| 7 days – 45 days | 5.75% | 6.25% | – | – | – | – |
| 46 – 60 days | – | – | 5.75% | 6.25% | 5.75% | 6.25% |
| 61 – 90 days | – | – | 6.25% | 6.75% | 6.00% | 6.50% |
| 91 days – 120 days | – | – | 6.25% | 6.75% | 6.00% | 6.50% |
| 46 days – 179 days | 6.25% | 6.75% | – | – | – | – |
| 121 days – 184 days | – | – | – | – | 6.00% | 6.50% |
| 180 days – 210 days | 6.35% | 6.85% | 6.75% | 7.25% | – | – |
| 7 months – 9 months | – | – | 6.75% | 7.50% | – | – |
| 185 days – 289 days | – | – | – | – | 6.50% | 7.00% |
| 9 months – < 1 Year | – | – | 7.00% | 7.50% | – | – |
| 211 days – < year | 6.40% | 6.90% | – | – | – | – |
| 290 days – < 1 year | – | – | – | – | 6.75% | 7.25% |
| 1 Year – < 2 Years | 6.70% | 7.20% | 7.25% | 7.75% | – | – |
| 1 year – 389 days | – | – | – | – | 6.75% | 7.25% |
| 390 days – 2 years | – | – | – | – | 7.00% | 7.50% |
| 2 years – 3 Years | 6.75% | 7.25% | 7.10% | 7.60% | 7.00% | 7.50% |
| 3 years – 4 Years | 6.80% | 7.30% | 7.10% | 7.60% | 7.25% | 7.75% |
| 4 years – 5 years | 6.80% | 7.30% | 7.10% | 7.60% | 7.25% | 7.75% |
| 5 Years – 10 Years | 6.85% | 7.35% | 6.00% | 6.50% | 7.00% | 7.50% |
For senior citizens, another option is Pradhan Mantri Vaya Vandana Yojana, which provides 8.30 per cent interest rate for 10 years. Distributed through the LIC of India, the scheme offers choice of getting monthly, quarterly, half-yearly and yearly pensions. Like Post Office SCSS, this scheme also has capping on maximum investments and a senior citizen, along with his/her spouse, can invest maximum Rs 15 lakh.
