SCSS vs Senior Citizen Fixed Deposit: Which is a better option between two?

There are a lot of investment options for senior citizens so that they can easily fulfil their post-retirement financial goals. Senior Citizen Savings Scheme (SCSS) and Senior Citizen Fixed Deposit are two promising investment instruments that the elderly people can opt for. While SCSS is a retirement benefit scheme that helps individuals above the age of 60 to invest a lump sum amount to get good returns, Senior Citizen FD is a term deposit plan with favourable interest rates.

Both SCSS and FDs have a few similarities like the lock-in period. However, there are certain differences between the two, and the benefits that they come with. Take a look at the features of both investment plans to decide which can be a better option for you.

Senior Citizen Savings Scheme: Features

1. Since it is a government-backed investment scheme, SCSS can be considered a secure and safe investment plan.

2. Subscribers can also get a tax deduction of up to Rs.1.5 lakh under Section 80C of the Income Tax Act, 1961.

3. The scheme matures upon the completion of five years, but can be extended for another three years.

4. Opening an SCSS account is very simple. Individuals can visit any authorised bank or post office across the country. Subscribers can also transfer their SCSS account across the country.

5. The minimum deposit amount is Rs 1,000, which can be increased in multiples of Rs 1,000 thereafter. The maximum amount that can be invested is Rs 30 lakh in a financial year.

Senior Citizen Fixed Deposit: Features

1. In comparison to normal FDs, banks offer special interest rates to senior citizens. Normally, 0.5 per cent extra interest is given to elderly customers.

2. Investors can choose different options for crediting of interest amount - monthly, quarterly, half-yearly or yearly. In case of monthly interest, they can turn the payouts into regular incomes to support their finances.

3. Tax benefits are available for certain FDs which have tenure of five years or more.

Difference between difference between SCSS and Senior Citizen Fixed Deposit

While SCSS has a higher rate of interest of 8.2 per cent and is covered under Section 80C, a term deposit can give a lower interest rate and no tax benefit, if the tenure is less than five years.

SCSS has a limit on maximum investment, while FDs come with several options including larger amounts and flexible tenures.

Any decision about which investment option to choose ultimately depends on their financial goals of the investors and the money they want to invest.