Big Questions

Are the new rates applicable to existing SCSS accounts?

Read on to know if the revised interest rates will prevail for the old SCSS deposits

Are the new rates applicable to existing SCSS accounts?

Recently, the government hiked the rate of interest of the small savings schemes for the third quarter, i.e., October 1, 2022 to December 31, 2022. For SCSS, the increase was by 20 bps - from 7.40 per cent to 7.60 per cent.

So are the revised interest rates applicable to the old SCSS depositors?

Let's understand.

The Senior Citizen Savings Scheme (SCSS) is a risk-free government-backed scheme that offers a guaranteed return to the retirees. The government announces/revises the rate of interest for SCSS and other small savings schemes every quarter.

However, to answer the question, no, the new rate is only applicable to new deposits. This rate is fixed for five years. After the five-year tenure, you have an option to extend the term by another three years. The rate for those three years will be based on the prevailing interest rate until maturity.

What about the existing SCSS accounts?
As for the existing accounts, they will continue to have the older rates which were assigned at the time when the initial deposit was done. The rate of interest as applicable on the day of deposit gets locked in for the entire tenure of five years. For example, if you invested in SCSS in 2017 and the interest rate at that time was 8.40 per cent, you would've earned that rate till the end of the entire five-year tenure. If your existing SCSS is completing its 5-year tenure now, then on extension, the rate of interest would be (the present) 7.60 per cent - which will be applicable for the next three years.

Suggested read: How to invest beyond Rs 15 lakh in SCSS?

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