Savings account is the most popular product that all banks offer for their customers. It is a safe and guaranteed place to put some of your excess money. It earns an interest as you keep it there as long as the balance is above which it can earn interest.
However, the sad truth about savings account, even though it gives interest, is it yields very low interest ranging from 0.25 to 0.50% per year depending on the bank where your account is placed. Because of this reason, many people are looking for other ways to earn higher interest for their money, and most of them tries to invest in time deposit (TD).
What is Time Deposit
Maybe you already heard and learned time deposit through the Internet and some of your friends. In other countries, it is also called certificate of deposit (CD) or term deposits. It is much the same as a normal savings account but the interest it earn is much higher.
The downside about TD is that you cannot withdraw your money anytime you want because it is on the holding period. After investing in time deposit, you will be give a certificate showing that you invest your money for a particular term period.
However, if you really want your money badly because of emergency needs, you can withdraw it with a corresponding penalty for early withdrawal. Here, the computation will be done by the bank so you could know how much you will get.
How to Invest in Time Deposit
In general, most of the banks require their customers to open a savings account before they allow their customers to invest in time deposit. By doing this so, you can make an automatic deposit of your money from TD to SA when it matures and in cases you want to completely withdraw. It is like your TD should be linked in with your bank’s SA.
The application for TD is not hard especially if you already have a SA in the bank you want to apply. There are some forms that you need to fill out indicating the amount you want to put in TD and period or term, that’s why it is also called a term deposit.
Some banks put the period in days, others in months, nevertheless, it is still the same. The term period could be 30, 60. 90, 120 days and so on. A longer term or period means a higher interest rate since you will “loan” your money to the bank for a longer time giving you higher profit.