HDFC Bank, Federal Bank hike FD rates: Senior citizens can earn up to 7.20% | Personal Finance
Senior citizens can earn up to 7.20 per cent annually on fixed deposits with Federal Bank, while HDFC Bank has raised its rate for a select tenure to 7.10 per cent. The changes come as banks revise deposit rates across different maturity periods.
HDFC Bank’s revised senior citizen rates are effective from August 19, while Federal Bank’s new rates came into effect on August 17. The revisions matter for senior citizens who rely on fixed deposits for regular income and capital preservation.
HDFC Bank raises one senior citizen FD rate
HDFC Bank has increased its FD interest rate for senior citizens by 10 basis points on deposits below Rs 3 crore for one particular maturity period.
The rate for deposits with a tenure of 3 years 1 day to less than 4 years 7 months has increased from 7 per cent to 7.10 per cent a year.
After the revision, HDFC Bank’s senior citizen FD rates range from 3.25 per cent to 7.10 per cent, depending on the tenure.
Key rates for senior citizens include:
7-14 days: 3.25 per cent
30-45 days: 3.75 per cent
6 months 1 day to 9 months: 6 per cent
1 year to less than 15 months: 6.75 per cent
15 months to less than 18 months: 6.85 per cent
18 months to 3 years: 6.95 per cent
3 years 1 day to less than 4 years 7 months: 7.10 per cent
5 years 1 day to 10 years: 6.65 per cent
HDFC Bank has not revised its rates for regular customers. They range from 2.75 per cent to 6.50 per cent a year, with the highest rate available for the 3-year-1-day to less-than-4-year-7-month tenure.
This gives senior citizens an additional 60 basis points over regular customers on the tenure offering the bank’s highest rate.
Federal Bank offers up to 7.20 per cent
Federal Bank has revised its FD rates for deposits below Rs 3 crore.
Following the revision, regular customers can earn between 3 per cent and 6.70 per cent, while senior citizens can earn between 3.50 per cent and 7.20 per cent.
The bank’s highest rate is available on a 48-month FD.
For senior citizens, the key rates are:
7-29 days: 3.50 per cent
30-45 days: 3.75 per cent
46-90 days: 4.75 per cent
91-180 days: 5 per cent
181 days: 6.50 per cent
182-270 days: 6 per cent
271 days to less than one year: 6.50 per cent
One year: 6.75 per cent
Above one year to less than 15 months: 6.90 per cent
15 months: 7.15 per cent
Above 15 months to 24 months: 6.90 per cent
Above 24 months to less than 48 months: 7 per cent
48 months: 7.20 per cent
Above 48 months to 10 years: 6.90 per cent
Should senior citizens break FDs?
A higher interest rate does not automatically mean an existing FD should be closed and reinvested.
Before switching, senior citizens should compare:
The interest rate currently being earned
The remaining tenure of the existing FD
The rate available on a new FD
The penalty for premature withdrawal
The tax impact on the interest earned
For example, an investor already earning 7 per cent on an HDFC Bank FD may gain only 10 basis points by moving to the new 7.10 per cent rate. Once premature withdrawal charges and lost interest are considered, switching may not necessarily improve returns.
For someone whose FD is maturing soon, however, the revised rates provide an opportunity to compare options before reinvesting the money.
Higher FD rate is not the only factor
Senior citizens should also consider liquidity and taxability before choosing an FD.
FD interest is taxable according to the depositor’s applicable income-tax slab. As a result, the actual return after tax can be lower than the advertised rate.
For retirees dependent on interest income, spreading money across different maturities can also be useful. An FD ladder allows deposits to mature at different points, giving investors periodic access to funds instead of locking the entire corpus into one long-term deposit.
The latest rate changes also highlight why investors should not compare banks only on their maximum FD rate. The highest rate is often available only on a specific tenure, and the right FD will depend on when the investor expects to need the money.
