Senior citizen privileges on Fixed Deposit rates
Being a senior citizen has its advantages. Banks (private as well as public banks) are giving special privileges to the senior citizens as traditionally banks offered them 0.25-0.5% higher rates on fixed deposits compared with that to ordinary investors. But now few banks are offering senior citizens almost 1% more! The reason being senior citizens usually have a bulk of their investments in fixed deposits, thus making them prized customers for banks.
Axis Bank spokesperson says, “Senior citizens have traditionally been the most active investors in fixed deposits. So, the banking industry has always focused on generating deposits from them”. Axis offers an interest rate of 10.25% on deposits of 15-18 months to those above 60 years whereas other earn 9.25%.
Even public sector banks are offering higher rates on FDs to senior citizen. Due to competition from private banks they are also offering competitive rates.
The higher rates coincide with the lowering of age limit for the senior citizen category of taxpayers in this year’s budget. From 1st April, anybody above 60 years will be considered a senior citizen for tax purposes instead of 65 years earlier. The tax exemption for this category is 2.5 lakh. The budget has also introduced a new category of very senior citizens, those above 80 years. The tax exemption for them is 5 lakh a year.
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