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SBI's Wecare FD scheme or SCSS? Where should senior citizens invest


State Bank of India or SBI, the country's largest lender, has recently announced a special fixed deposit scheme for senior citizens called 'SBI Wecare' scheme.

SBI's Wecare FD scheme or SCSS? Where should senior citizens invest
State Bank of India or SBI, the country's largest lender, recently announced a fixed deposit scheme --SBI Wecare--for senior citizens. This scheme, according to SBI, is available for a limited period, up to September 30, 2020. Senior citizens looking for good returns as well as safety can go for this scheme, according to experts.
“Bank FDs are always a good form of investments. It provides regular income, is safe and in case of emergency it can be immediately encashed,” says Ashok Shah, partner at NA Shah Associates.
However, there are also some other secure investment options available for senior citizens that provide higher interest rates as compared to SBI special FD such as Senior Citizen Savings Scheme (SCSS). Nevertheless, investors should evaluate all other features too before making any investment decisions, according to Shah.
Compare SBI's Wecare scheme with SCSS:
Only resident senior citizens aged sixty years and above are eligible to invest in SBI's Wecare deposit scheme.
In case of SCSS too, an investor can park money after attaining the age of 60. Also, an individual who has opted for the Voluntary Retirement Scheme (VRS) is eligible to invest in the scheme from the age of 55 years. A retired personnel of Defence Services (excluding Civilian Defence employees) is also eligible to open an account under this scheme on attaining the age of 50 years, subject to fulfilment of other specified conditions.
Interest rates
SBi's special FD scheme offers 6.5 percent interest rate. On the other hand, investment in the Senior Citizen Savings Scheme (SCSS) fetches 7.4 percent interest.
In SBI's special FD scheme, one can invest for a minimum of five years and a maximum of 10 years. The maturity period of SCSS  is 5 years.
Tax benefits
SBI Wecare scheme doesn't offer any tax benefits. On the other hand, investments under SCSS scheme qualifies for the benefit of Section 80C of the Income Tax Act.
Premature withdrawal
Premature withdrawal in case of SBI's Wecare scheme means the investment will fetch only 6.20 percent.
In case of SCSS, premature closure is allowed after one year against deduction of 1.5 percent of the deposit, and 1 percent after two years. If premature withdrawal is done before 1 year, no interest rate is payable.
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