Senior Citizen 5-Year FDs Of SBI, HDFC, ICICI, PNB vs SCSS: Where Should You Park Your Savings?

Currently, SCSS offers a guaranteed interest rate of 8.2 percent, effective from January 1, 2024.

File Photo

New Delhi: As seniors prioritize secure and reliable savings options, the choice often comes down to parking their money in either a bank fixed deposit or a post office small savings scheme. The Senior Citizen Savings Scheme (SCSS), a popular offering among the nine small savings schemes provided by the post office, stands out as a preferred choice for the older generation.

SCSS: Maturity Period And Interest Rates

The SCSS comes with a maturity period of five years, extendable for an additional three years. Currently, the scheme offers a guaranteed interest rate of 8.2 percent, effective from January 1, 2024. Once invested, the interest rate remains fixed throughout the tenure, and senior citizens can invest up to Rs 30 lakh in this scheme. ()

SBI Senior Citizen FD Rates

The State Bank of India (SBI), the nation's largest lender, provides interest rates ranging from 4 percent to 7.5 percent for tenures spanning 7 days to 10 years. Specifically, on a 5-year tenure, SBI offers senior citizens an interest rate of 7.25 percent, with the last revision made on December 27, 2023. ()

PNB Senior Citizen FD Rates

Punjab National Bank (PNB) offers senior citizens an interest rate between 4 percent to 7.75 percent for tenures of 7 days to 10 years. Notably, the bank provides 7 percent interest for senior citizens on deposits maturing in five years, with the latest rates revised on January 8, 2024.

HDFC Bank And ICICI Bank Senior Citizen FD Rates

HDFC Bank offers senior citizens an interest rate ranging from 4 percent to 7.75 percent, with a 7.5 percent rate on a 5-year tenure, last revised on October 1, 2023.

On the other hand, ICICI Bank provides an interest rate between 3.5 percent to 7.65 percent, offering 7.5 percent on a 5-year tenure, with rates last revised on October 16, 2023.

SCSS vs Bank FDs: Comparing Interest Rates

When comparing SCSS with bank FDs, SCSS leads with a fixed interest rate of 8.2 percent. In contrast, SBI and PNB offer 7.25 percent and 7 percent, respectively, on a 5-year tenure. HDFC and ICICI Bank provide a competitive 7.5 percent to senior citizens on deposits maturing in five years.

Taxation Insights

Investments in SCSS and five-year bank FDs qualify for tax deductions under Section 80C. While the SCSS deposit limit is Rs 30 lakh, offering a quarterly interest of Rs 61,500 and an annual interest of Rs 2,46,000 at 8.2 percent, it's crucial to note that TDS will be deducted at a specified rate as the interest exceeds the Rs 50,000 limit.

Additionally, senior citizens can benefit from a deduction of up to Rs 50,000 on the interest on deposits, including fixed deposits, under Section 80TTB of the Income Tax Act.