Time Deposit
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 Although funds can be withdrawn from CDs without notice (on demand), there are penalties for early withdrawal. |
|
Investopedia explains '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 Once maturity is reached, the funds can be withdrawn without penalty, or it can be renewed and held for an additional term.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 Definitions
Articles Of Interest
-
Do Money-Market Funds Pay?
This investment provides security, but its returns may not be adequate for long-term investors. -
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. -
If I want to have some cash in a liquid account for unexpected emergencies, what is best? A savings account or another type?
It's always a good idea to keep some money set aside in a liquid form, but it's a double-edged sword, because the more liquid your money, the less it's earning. If you never have an emergency, ... -
7 Easy To Understand ETFs To Replace A Savings Account
If you have a savings account or certificate of deposit (CD), you’re probably not making much more than 1% each year from interest. -
3 Banking Moves You Should Make Before Traveling
Putting your finances in order should be one of your top priorities before traveling out of the country. -
Clearing Up Tax Confusion For College Savings Accounts
Put your kids through school without being hounded by the tax man. -
Besides a savings account, where is the safest place to keep my money?
Savings accounts are safe because investors' deposits are guaranteed by the Federal Deposit Insurance Corporation (FDIC) for bank accounts or the National Credit Union Administration (NCUA) for ... -
Changes To Your Checking Account
Checking accounts have evolved a lot over the years. Here are the five biggest changes that can affect your wallet. -
The Most Costly Banking Mistakes You Can Make
With changing and increasing fees, it can be difficult to avoid bank charges, but investing time in finding out what your bank charges, and when, can help you save money. -
How Interest Rates Affect The Stock Market
Whether you're buying lunch, a home or a stock, you're influenced by interest rates.
Free Annual Reports