Senior citizens' FD schemes have been extended until June 30.
Senior citizens' fixed deposit (FD) plans have been extended until June 30, 2021. Senior citizens receive an additional 50 basis points (bps) in standard FD schemes, while special FD schemes have an additional rate of interest.
Some banks launched special FD plans for senior citizens with a 5-year or longer term in May 2020. An additional rate of interest was applied to contributions made by senior citizens in such schemes, in addition to the extra that they were already entitled to. A senior citizen who wants to invest in a bank FD for the future can now do so until June 30, 2021.
In the wake of the Covid-19 pandemic and low interest rates, four major commercial banks — State Bank of India (SBI), Bank of Baroda, ICICI Bank, and HDFC Bank — launched special fixed deposit schemes for senior citizens with a 5-year or longer term.
Standard FD schemes pay an additional 0.5 percent interest to depositors over the age of 60. The higher rate applies to new deposits as well as deposits renewed over the scheme's duration.
Since interest income from FDs is entirely taxable, tax responsibility should be considered when investing in them. Often, before committing to a long-term investment, make sure you have enough capital to take advantage of other investment opportunities. If a depositor wants to close an FD early, the rate of interest charged to the depositors is usually lower. Before you book an FD with any bank, consider out what it is from the bank. FDs are best for capital preservation rather than wealth creation because they rarely outperform inflation over time.