For the first time in the past three years, senior citizens are seeing returns of 8 percent and more on fixed deposits. Many are hence rushing to their banks to review existing FDs.
At the peak of the pandemic, rates dropped to as low as 5.5 percent due to excess liquidity. It was last month that the govt increased the return on the senior citizen saving scheme (SCSS). The rates regained the 8 percent level after falling to 7.4 percent during the pandemic. The gap between SCSS and FDs has hence diminished.
"Breaking an existing FD may be beneficial to some customers who have invested in FD that don't carry a penalty for premature withdrawal," said Gaurav Gupta, founder, and CEO of lending platform Money Wide, reports TOI.
Non-banking companies are also offering attractive returns these days. The 'Sapphire' scheme of HDFC offers up to a 7.6 percent interest rate. This company renders higher returns if the deposits are made online are if its investors are shareholders.
Fixed deposits (FDs) are commonly used as investment vehicles. The repo rate has climbed from 5.9% to 6.25% as a result of the fifth consecutive rise since May last year. Since India's annual retail price inflation has dropped to 5.88% as of November 2022, investors can now enjoy returns from banks that outperform inflation.
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