Time Deposit

Loading the player...

DEFINITION of 'Time Deposit'

A savings account or certificate of deposit (CD) held for a fixed-term, with the understanding that the depositor can make a withdrawal only by giving notice. A time deposit is an interest-bearing bank deposit that has a specified date of maturity. A bank is authorized to require depositors to give 30 days notice before withdrawing funds from a savings account; however, passbook accounts are typically considered readily available funds and account holders can make withdrawals without giving advance notice. Certificates of deposit are issued for a specified term, such as 30 days (the minimum) up to five years. Although funds can be withdrawn from CDs without notice (on demand), there are penalties for early withdrawal.

BREAKING DOWN 'Time Deposit'

Banks and other financial institutions can negotiate any maturity term (the length of the deposit) that a customer requests, as long as the term is a minimum of 30 days and interest is paid. Once maturity is reached, the funds can be withdrawn without penalty, or it can be renewed and held for an additional term. In most cases, the longer the term, the higher the interest rate will be. For example, a one-year certificate of deposit may offer a 1.10% APY, while a five-year CD for the same amount might provide a 1.75% APY. In addition, larger CDs (those with a higher deposit) generally offer more favorable interest rates.

RELATED TERMS
  1. Money Market Account

    An interest-bearing account that typically pays a higher interest ...
  2. Nonpersonal Time Deposit

    Time deposit accounts held by corporate bank customers that pay ...
  3. Notice Of Withdrawal

    A notice given to a bank by a depositor. As its name implies, ...
  4. Savings Account

    A deposit account held at a bank or other financial institution ...
  5. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. ...
  6. Demand Deposit

    Funds held in an account from which deposited funds can be withdrawn ...
Related Articles
  1. Term

    How Time Deposits Work

    A time deposit is an interest-bearing bank deposit that has a specific maturity date.
  2. Forex Fundamentals

    How to Buy Chinese Yuan

    Discover the different options that are available to investors who want to obtain exposure to the Chinese yuan, including ETFs and ETNs.
  3. Options & Futures

    Do Money-Market Funds Pay?

    This investment provides security, but its returns may not be adequate for long-term investors.
  4. Retirement

    The Money Market

    If your investments in the stock market are keeping you from sleeping at night, it's time to learn about the safer alternatives in the money market.
  5. Stock Analysis

    Analyzing Porter's Five Forces on JPMorgan Chase (JPM)

    Examine the major money-center bank holding firm, JPMorgan Chase & Company, from the perspective of Porter's five forces model for industry analysis.
  6. Retirement

    Retirees: How to Survive When Interest Rates Drop

    Low interest rates are a portfolio killer if you're living off of investment income. Some strategies for dealing.
  7. Investing

    3 Small Steps to Maximize Your Investing Goals

    Instead of starting the New Year with ambitious resolutions, why not taking smaller manageable steps that can have a real impact.
  8. Investing Basics

    Financial Markets: Capital vs. Money Markets

    Financial instruments with high liquidity and short maturities trade in money markets. Long-term assets trade in the capital markets.
  9. Term

    Who Benefits from Microfinance?

    Microfinance describes banking services provided to low-income people or groups. Specific services offered by microfinance institutions include microloans, micro-savings and micro-insurance products.
  10. Mutual Funds & ETFs

    2016's Most Promising Money Market Funds

    Learn information on some of the most promising money market mutual funds for investors to consider adding to their portfolio in 2016.
RELATED FAQS
  1. Can a Flexible Spending Account (FSA) be used for Lasik?

    The owner of a Flexible Spending Account (FSA) can use money from the account on various eye surgery procedures, including ... Read Full Answer >>
  2. Can a Flexible Spending Account (FSA) be used for a gym membership?

    The U.S. Internal Revenue Service (IRS) typically does not allow funds from a Flexible Spending Account (FSA) to be used ... Read Full Answer >>
  3. Can a Flexible Spending Account (FSA) be used for dental procedures?

    The U.S. Internal Revenue Service (IRS) allows funds from a Flexible Spending Account (FSA) to be used for qualified medical ... Read Full Answer >>
  4. What do states do with unclaimed property?

    Unclaimed property refers to personal accounts in financial institutions or companies that have had no activity and whose ... Read Full Answer >>
  5. How long does a stock account have to be dormant before it can be escheated?

    A stock account is typically considered dormant and eligible for escheatment after five years of inactivity; however, this ... Read Full Answer >>
  6. Do banks have working capital?

    The concept of working capital does not apply to banks since financial institutions do not have typical current assets and ... Read Full Answer >>
Hot Definitions
  1. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  2. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  3. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  4. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  5. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
Trading Center