Why are senior citizens FD (fixed deposit) rates higher?

Posted on Friday, March 31st, 2023 | By IndusInd Bank

Mr. Santosh had always been a prudent man when it came to his finances. He had worked hard for years as a sales officer in a multinational corporation and had saved up a good amount of money for his retirement. Now that he was retired, he was looking for ways to grow his savings while also minimizing risk.

One of the options that he was considering was opening a fixed deposit (FD) account. Fixed deposits have been one of the most popular investment options in India for decades. They offer a safe and secure way to invest money, with a guaranteed return on your investment.  

Here are 5 reasons why FD is so popular:

1. Guaranteed returns: Fixed deposits offer a guaranteed return on your investment, which means you know exactly how much money you will earn on your deposit. This can provide peace of mind and stability in your financial planning.

2. Low risk: Fixed deposits are considered to be low-risk investments since they are not subject to market fluctuations or fluctuations in interest rates. Your investment is protected, and you are not exposed to any risks that are associated with stocks or other high-risk investments.

3. High-interest rates: IndusInd Bank offers an attractive interest rate on fixed deposits which can help you earn more money on your investment. The interest rate offered by a fixed deposit is typically fixed for the duration of the deposit, which means you will earn the same rate of interest throughout the term.

4. Flexible tenure: Fixed deposits usually offer flexible tenures, ranging from a few months to a few years, depending on your needs. This can help you plan your investments and choose a tenure that suits your financial goals.

5. Easy to open: Fixed deposits are easy to open and require minimal documentation. You can open a fixed deposit account at IndusInd Bank in just a few clicks from the comfort of your home using the IndusMobile App.

Coming back to the question at hand: why are interest rates on fixed deposits opened by senior citizens higher than those for regular fixed deposits? This can be attributed to two primary factors explained below:

They are low-risk investors: Senior citizens are considered to be a low-risk category of investors. This is because they generally have a lower risk appetite and tend to invest their money in safer and more secure investment options. Fixed deposits are a popular choice among senior citizens because they offer guaranteed returns and are backed by the government. Banks and financial institutions consider senior citizens as a low-risk category of investors and offer them higher interest rates on fixed deposits to encourage them to invest.

They are priority customers: Senior citizens are a priority customer segment for banks and financial institutions as they are more likely to open an FD account. This is because the interest amount that they earn on their funds acts a steady source of income during their retirement

In addition to higher interest rates on fixed deposits, senior citizens also have access to a range of other benefits and privileges, such as lower charges on banking services, priority customer service, and preferential treatment when it comes to loans and other financial products. Santosh was happy to learn that the higher interest rates on fixed deposits opened by senior citizens were not just a marketing gimmick but were based on sound financial principles. He decided to invest a portion of his savings in a fixed deposit account. To enjoy higher returns on his savings, he opted for IndusInd Bank Fixed Deposits. He also opened a Savings Account with IndusInd Bank to enjoy easy access to his money while earning interest income on his account balance.

IndusInd Bank Savings Account and Fixed Deposits are a great way to grow your savings with high interest income. Additionally, opening a Savings Account with IndusInd Bank is incredibly easy. Enjoy a 100% digital account opening journey using Video KYC and open your account remotely. IndusInd Bank Fixed Deposits also offer competitive interest rates and flexible tenures ranging from 7 days to 10 years. You can open a Fixed Deposit account with as little as ₹1,000 and enjoy a hassle-free digital process that lets you manage your deposits conveniently.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision.  IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.