SCSS vs Bank FD: Which investment scheme is offering 8.2% interest rate to senior citizens?

Many senior citizens invest in fixed deposits (FDs) for a steady income. However, with FD interest rates falling in the last few months, investors are getting lower returns on new FD investments compared to a few months ago. However, there is a government-backed small savings scheme, specially designed for senior citizens, which has been offering a significantly higher interest rate than many leading bank FDs.

What is Senior Citizen Savings Scheme (SCSS)?

Senior Citizen Savings Scheme (SCSS) provides a fixed interest rate subject to review every quarter. The SCSS account that can be opened in a post office or a bank has a five-year term, with the option to extend it for an additional three-year period. Under Section 80C of the Income Tax Act, 1961, deposits up to a maximum of Rs 1.5 lakh in a financial year are eligible for tax benefits. The lowest amount that can be invested in the scheme is Rs 1,000, while the highest is Rs 30 lakh. A senior citizen can open an individual or a joint account in SCSS.

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Bank FD details

Bank fixed deposits up to Rs 5 lakh per depositor in a bank are covered under Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance scheme. Tenures of FDs vary between 7 days to 10 years. The 5-year tax saver FD qualifies for tax deduction under Section 80C (up to Rs 1.5 lakh investment). There is no upper limit to invest in a fixed deposit scheme, however, interest rates may vary depending on the retail or the bulk deposit option.

Here’s a quick comparison of the interest rates of the 5-year fixed deposits from top banks and SCSS to help you make an informed choice.

The government has not raised the SCSS interest rate for the current quarter. Account holders receive an interest rate of 8.2%. Tax Deducted at Source (TDS) is applicable if the total interest in all post office accounts including SCSS exceeds the prescribed limit in a financial year unless Form 15G/15H is submitted, as per information available on the India Post website. The minimum deposit shall be Rs 1,000 and in the multiple of 1,000, subject to a maximum limit of Rs 30 lakh in all SCSS accounts. The interest is payable every quarter.

SBI 5-year senior citizen FD interest rate

As per the State Bank of India (SBI) website, the bank offers a 7.05% interest rate to senior citizens in the 5-year FD. The rate is the same for the FDs up to 10 years.

Canara Bank 5-year senior citizen FD interest rate

As per the Canara Bank website, the bank offers a 6.75% rate to senior citizens for fixed deposits held for 5 years and up to 10 years.

Punjab National Bank 5-year senior citizen FD interest rate

As per the PNB website, the bank offers a 6.8% interest rate to senior citizens on FDs from 5 years to 1894 days.

HDFC Bank 5-year senior citizen FD interest rate

As per the HDFC Bank website, the bank offers a 6.90% FD interest rate on the 5-year senior citizen FD.

ICICI Bank 5-year senior citizen FD interest rate

As per the ICICI Bank website, the bank offers a 7.10% interest rate to senior citizens on the fixed deposits held for 5 years and up to 10 years.

Axis Bank 5-year senior citizen FD interest rate

As per the Axis Bank website, the bank offers a 7.35% interest rate on the 5-year and up to 10-year senior citizens FDs.

Looking at the interest rates offered by SCSS and bank FDs, you can see that SCSS offers the highest interest rate among all of them.