Term Deposit Account

A time deposit or term deposit (in the United States also known as a certificate of deposit) is a deposit in a financial institution with a specific maturity date or a period to maturity, commonly referred to as its “term”. Time deposits differ from at call deposits, such as savings or checking accounts, which can be withdrawn at any time, without any notice or penalty. Deposits that require notice of withdrawal to be given are effectively time deposits, though they do not have a fixed maturity date.

• Canadian Term Deposit Rates
• Term Deposit Account Meaning

Unlike a certificate of deposit and bonds, a time deposit is generally not negotiable; it is not transferable by the depositor, so that depositors need to deal with the financial institution when they need to prematurely cash out of the deposit.

1. Here is a brief comparison of the main differences of term deposits and savings accounts. What is a term deposit? With a term deposit, you lock away an amount of money for an agreed length of time (the ‘term’) – that means you can’t access the money until the term is up.
2. With our Term Deposits, you have the security of locking in a fixed rate of return, giving you greater peace of mind. Choose from a range of terms You can choose from a range of terms to suit your needs. Anything from 1 month to 5 years.

An individual's or company's account at a COMMERCIAL BANK into which the customer can deposit cash or cheques and from which he or she can draw out money subject to giving notice to the bank. A term deposit account offers interest on the principal amount deposited by the account holder for a fixed term. The deposited amount in the term deposit account cannot be liquidated before the end of the term without a notice or loss of potential interest. To be eligible for Term Deposit-i, you must: Have at least one HSBC Amanah current account-i or savings account-i; Minimum deposit amount: RM5,000 for 1 momth or RM1,000 for 2 months and above. Member of Perbadanan Insurans Deposit Malaysia. Protected by Perbadanan Insurans Deposit Malaysia up to RM250,000 for each depositor.

Time deposits enable the bank to invest the funds in higher-earning financial products. In some countries, including the United States, time deposits are not subject to the banks’ reserve requirements, on the basis that the funds cannot be withdrawn at short notice. In some countries, time deposits are guaranteed by the government or protected by deposit insurance.

Interest[edit]

Time deposits normally earn interest, which is normally fixed for the duration of the term and payable upon maturity, though some may be paid periodically during the term, especially with longer-term deposits. Generally, the longer the term and the larger the deposit amount the higher the interest rate that will be offered.^[1]

Canadian Term Deposit Rates

The interest paid on a time deposit tends to be higher than on an at-call savings account, but tends to be lower than that of riskier products such as stocks or bonds. Some banks offer market-linked time deposit accounts which offer potentially higher returns while guaranteeing principal.

Term Deposit Account Meaning

At maturity[edit]

At maturity, the principal can be either paid back to the depositor (usually by a deposit into a bank account designated by the depositor) or rolled over for another term. Interest may be paid into the same account as the principal or to another bank account or rolled over with the principal to the next term.

The money deposited normally can be withdrawn before maturity, but a significant penalty will normally be payable.

See also[edit]

References[edit]

1. ^'Time Deposit'. Investopedia. 2003-11-24. Retrieved 2016-11-01.