Factors senior citizens should keep in mind while choosing between Small Saving Schemes

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Among all the small savings schemes, Senior Citizen Savings Scheme (SCSS) offers the highest interest rates to senior citizens. The scheme offers 8.2% p.a. for 5-year tenure, which beats the 5-year senior citizen FD rates of PSU banks and large private sectors banks by more than 100 bps. Only a couple of small finance banks like Suryoday Bank, Unity Bank, DCB Bank and Fincare Bank offer higher FD interest rates to senior citizens than the SCSS rates.Moreover, investments in SCSS qualify for tax deduction under Section 80C. While depositors can also open tax saving bank FD schemes to save tax under Section 80C, the interest rate of SCSS beats tax saving bank FD rates by a wide margin, except for a few banks like Suryoday Bank, DCB Bank and Fincare Bank.        

“In case of capital protection and income certainty, SCSS scores higher than bank FDs. Being managed by the Union Finance Ministry, SCSS depositors are covered under sovereign guarantee, the highest form of capital protection and income certainty available to any investor/depositor in the country. In case of bank FDs, cumulative bank deposits (including FD, RD, savings account and current account) of up to Rs 5 lakh of each depositor maintained with each scheduled bank is covered under the depositor insurance program from DICGC, an RBI subsidiary. Thus, individuals seeking higher protection for their bank FDs can spread their FDs across multiple scheduled banks in such a manner that their cumulative bank deposit with each of those scheduled banks does not cross Rs 5 lakh.” Says Naveen Kukreja, Co-Founder and CEO, Paisabazaar


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