HDFC Bank Special FD Scheme For Senior Citizens To End On 15th April; Should You Invest?

Senior citizens seeking investments with higher returns should be notified that on April 15, HDFC Bank, the country's largest private sector bank, would discontinue its special fixed deposit (FD) programme established exclusively for them. The "Senior Citizen Care FD" scheme, introduced by HDFC Bank on May 18, 2020, will ultimately expire on April 15, unless and until another extension is announced. This means that senior citizens have a limited period of time to invest in the HDFC Bank Senior Citizen Care FD scheme if they want to earn returns on long-term deposits as high as 7.75%.

Senior Citizen Care FD Interest Rate: HDFC Bank Senior Citizen Care FD comes with a pre-determined tenure of 5 years 1 day to 10 years. Furthermore, senior citizens can benefit from a higher interest rate with HDFC Bank Senior Citizen Care FD during this particular period. Senior Citizen Care FD offers an additional 0.25% premium over and regular 0.5% premium already available for them. This means that senior citizens on their resident deposits booked for 5-10 years will get an interest rate of 7.75% which is 75 bps higher than the regular rate of 7%.

Senior Citizen Care FD Validity: "The benefit of the above additional rate of 0.75% is applicable on the special offer between 18th May 2020 to 15th April 2024. Further, this scheme is for those depositors who wish to deposit below Rs 5 crores," mentioned HDFC Bank on its website.

Eligibility Required For Senior Citizen Care FD: Only residents who are 60 years of age or older are eligible to apply for Senior Citizen Care FD. Both new deposits and renewals of current ones whose renewal date falls within the offer period are welcome under this scheme.

Senior Citizen Care FD Interest Rate Payout: The offer is applicable to fixed deposits with a minimum term of five years and one day and an interest payout of either quarterly or monthly interest is available on amounts under Rs 5 crores. Senior Citizen Care FD scheme by HDFC Bank as the name suggests is only open for fixed deposits and not recurring deposits.

Senior Citizen Care FD Investment Amount: A minimum of Rs 5000 and a maximum of Rs 4,99,99,999.99 (i.e., less than Rs 5 crores) can be invested in Senior Citizen Care FD for a minimum tenure of 5 years and 1 day and a maximum tenure of 120 months.

Premature Closure Rules of Senior Citizen Care FD: "Incase you opt for premature closure of this special Fixed Deposit (including sweep in / partial closure), the interest rate will drop as follows- (a) Premature closure on or before 5 years, the interest rate will be 1.00% below of the rate on the date of deposit booked, to the period for which deposit remained with the bank. (b) Incase of premature closure of Fixed Deposit after 5 years, the interest rate will be 1.25% below of the rate on the date of deposit booked, to the period for which deposit remained with the bank," mentioned HDFC Bank on its website.

Should Senior Citizens Invest In A Special FD Scheme?

Dr. KV Siva Prasad, Assistant Professor, Banking And Finance, KL Business School, KL Deemed to be University said, "HDFC Bank's Senior Citizens Fixed Deposit, offering a high-interest rate of 7.75%, is set to close on April 15. This special rate is applicable for terms from 5 years and 1 day to 10 years and is available to Indian senior citizens aged 60 and above. Given its competitive rate compared to other fixed deposits and some investment schemes like debt funds or the Post Office Monthly Income Scheme, it is an attractive option for senior citizens looking for safe and high-return savings. If one is considering a secure investment for your retirement savings, investing before the offer ends could be beneficial. However, keep in mind, there's a penalty for early withdrawal, so it's definitely suited for those who can lock in their funds for the specified duration."

S.Ravi,Founder,Ravi Rajan &Co said, "Senior Citizen Fixed Deposit (FD) schemes offer attractive interest rates to those above 60. Currently, rates can range from 3% to a tempting 8.5%, with some banks adding an extra 0.5% for seniors. This can be a secure way to generate income, especially since interest income up to Rs. 50,000 is tax-free. There's a catch, though. Certain banks offer these higher rates for limited times only. Suppose a bank offers 8.1% on fixed-rate deposits (FDs) with terms of 26-36 months. You may receive a cheaper rate if you lock in for a longer duration."

"Is it worth it then? Think about what you need. These FDs are ideal if you need a steady income within the next three years. For long-term investing, however, look at possibilities that could provide higher returns over an extended period. Keep in mind that inflation can reduce your money's buying power. Speak with a financial advisor to evaluate your unique circumstances and select the FD that best aligns with your objectives," S.Ravi further added.

Mr Jay Shah, Founder & CEO, Finwisor said, "FDs are recommended for specific section of people. Those who prefer convenience and want a high level of safety. For such senior citizens, it is recommended to lock the interest rates for longer tenures. Interest rates are expected to go down sequentially over time. One can do an FD where they have an existing relationship. Investors can also consider bonds/ NCD/ debt MFs with higher yields as per their risk appetite. Those in the higher tax slabs can also consider Arbitrage Funds - they enjoy low volatility like fixed Income products, yet beneficial equity taxation."

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.