Some banks offer senior citizens 1% additional on fixed deposits
Senior citizens are smiling all the way to their banks. While banks have traditionally offered them 0.25-0.5% higher rates on fixed deposits compared with that to ordinary investors, now some banks are offering senior citizens almost 1% more. There’s a good reason for this spoiling.
Senior citizens have a bulk of their investments in fixed deposits, which makes them prized customers for banks. “Senior citizens have traditionally been the most active investors in fixed deposits. So, the banking industry has always focused on generating deposits from them,” says a spokesperson of Axis Bank . This bank offers those above 60 years an interest rate of 10.25% on deposits of 15-18 months. Ordinary investors earn 9.25%
Other banks are not far behind. Even public-sector banks , which don’t market their rates aggressively, are tom-tomming higher rates for the grey population. “Our rates were below 10%, but with our competitors advertising over 10% rates, nobody would have come to us if we hadn’t matched this figure. So, we decided to give more than 0.5% for certain tenures,” says a senior official of a public-sector bank.
The higher rates coincide with the lowering of age limit for the senior citizen category of taxpayers in this year’s budget. From 1 April, anybody above 60 years will be considered a senior citizen for tax purposes compared to 65 years earlier. The tax exemption for this category is Rs 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 Rs 5 lakh a year.
Source: [Economic Times]
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