What is the ‘ideal’ Fixed Deposit tenor for Senior Citizens and others in new rate regime?

As Fixed Deposit interest rates have gone up in recent times, it becomes a natural question for depositors, especially senior citizens, as to what will be the ideal tenor for them to invest in FD.

Experts say that the ideal fixed deposit tenor in the current high-interest rate regime should depend on when the depositors need their funds. Therefore, the ideal tenor would vary from one depositor to another. Beyond the needs, one more important point on which the ideal tenor should depend is the actual interest rate offered on a specific tenor by banks.

While banks have increased their fixed deposit interest rates, the highest return on offer by a particular bank is not the same for all tenors. For instance, SBI is offering up to 7.6% interest on Amrit Kalash deposits of 400 days only.

For deposits of other tenors, the rates are lower. Similarly, the 9.6% interest rate offered by Suryoday Small Finance Bank to senior citizens is for deposits of 5 years. For deposits of more than 5 years, the bank is offering a lower rate.

Also Read: Winning strategies for senior citizens Fixed Deposit

The history of Fixed Deposit rates over the last decade says that depositors are not likely to get much better than a 7-8% interest rate on their FDs, especially if inflation remains mild, according to Adhil Shetty, CEO of Bankbazaar.com

Therefore, Shetty says, it makes sense to lock into the longest available tenors at peak rates. At peak rates, there’s less need for laddering for better average rates and liquidity at various intervals.

According to Shetty, the ideal solution for depositors in the current high-rate scenario is to have one Fixed Deposit at the highest rate. Having one FD at the highest rate will ensure better returns for longer. This FD can also be part-liquidated when the need arises.