Will a fixed deposit (FD) jointly held with a senior citizen get the higher interest rate that senior citizens get?
Yes, provided the senior citizen's name is the first one in the account. Usually, senior citizens earn an interest rate of 25-50 basis points (bps) more than other deposit holders. Some banks give up to 75 basis points extra. Also, the tax on the FD will apply to the senior citizen, as he is the first account holder. Hence, the senior citizen should fill the 15H form, so that the bank doesn't deduct tax at source
What happens if the first account holder dies before the deposit matures?
This is not governed by any RBI directive. So, while some banks offer the same rate till maturity, others offer a higher rate only till the senior citizen is alive and the normal card rate after that. So, check with your bank before you open an FD. Remember that tax will be applied on the second account holder once the senior citizen passes away
