Is a time deposit worth it?
A customer can earn a slightly higher interest rate with a time deposit account than would be available in a standard savings account or an interest-bearing checking account. The better return is offered because the funds remain locked until the maturity date of the account.
Time deposit tends to yield more interest than regular savings accounts which come without locking up funds for an agreed period. In conclusion, time deposit accounts offer a reliable alternative for people who want to earn more from the money they don't intend on spending.
- Your money isn't accessible. ...
- No extra deposits. ...
- Less flexibility. ...
- No bonus interest. ...
- Rollover terms are often less competitive. ...
- Won't benefit from rises in the market.
A term deposit could be a suitable option if you: have received your tax return and want to lock it away for a period of time. want the certainty of a fixed income stream. have a long-term savings goal in mind and want to earn interest in the meantime.
Cons of a term deposit
If you need to access your money, you may have to pay an early withdrawal penalty fee, and the withdrawal may require a period of notice. You also can't add to your balance during the term, so if you want to keep contributing to your savings, a term deposit might not be the best option for you.
When you enter a time deposit contract with the bank, you won't be able to withdraw your money until your time deposit matures.
For short-term goals (like building an emergency fund), a savings account provides easy access and the ability to keep adding to your savings. For long-term goals, a term deposit can lock away funds and offer higher returns.
CIMB Bank PH
CIMB Bank Philippines is one of the top contenders, offering a base interest rate between 2.5% (UpSave account) and 2.6% (GSave account) per annum. For time deposits, they provide up to 7.5% per annum for deposits starting at PHP 10,000.
Savings accounts are more flexible than term deposits. A savings account can be useful when you want to put your money away and have it earn some interest with the peace of mind that you can also access your funds as and when you need to. You can deposit or withdraw money at any time.
Time deposits represent a cornerstone of conservative investment strategies, offering a blend of safety, predictability, and relatively attractive returns in an often-volatile financial landscape.
What do you need to be careful of with term deposits?
Disadvantages of term deposits
To earn interest on your term deposit, your money is locked away for a chosen period of time. If you need your money before the term ends, you may have to pay a penalty fee. You may only receive a proportion of the interest earnt, or none at all.
| Bank | Term Deposit | Interest Rate |
|---|---|---|
| MOVE Bank | MOVE Bank Term Deposit - 5 months | 5.00% p.a. |
| Goldfields Money | Goldfields Money Stow it Term Deposit - 4 months | 4.80% p.a. |
| MyState Bank | MyState Bank Regular Term Deposit Account - 7 months | 4.60% p.a. |
| BankVic | BankVic Term Deposit - 6 months | 4.80% p.a. |
Changing your mind can be costly. You need to give 31 days' advance notice to withdraw from your term deposit before the maturity date, and you may also need to pay early withdrawal (prepayment) costs and fees if you choose to withdraw your term deposit before it matures.
A customer can earn a slightly higher interest rate with a time deposit account than would be available in a standard savings account or an interest-bearing checking account. The better return is offered because the funds remain locked until the maturity date of the account.
You can also add to your savings account whenever you like – either on a regular basis or when you have extra money to put in it. With a term deposit on the other hand, once you've made the initial deposit you won't be able to add any more to the balance until the agreed term has ended.
However, savings accounts that pay interest annually typically offer more competitive interest rates because of the effect of compounded interest. In simple terms, rather than being paid out monthly, annual interest can accumulate over the year, potentially leading to higher returns on the sum you've invested.
| Amount | Tenor | |
|---|---|---|
| 250,000.00 – 499,999.99 | 0.250% | 0.250% |
| 500,000.00- 999,999.99 | 0.250% | 0.250% |
| 1,000,000.00-4,999,999.99 | 0.375% | 0.375% |
| 5,000,000.00 and above | 0.375% | 0.375% |
Penalties: In case of premature withdrawal, the investor has to pay a certain amount as a penalty to the bank. The amount charged by the bank as a penalty is generally from 0.50 % to 1.00 % of the interest. The penalty may change over time as and when the bank decides to update its policies.
- Recurring Deposits.
- Fixed Deposits.
Traditional Savings Accounts
If your goal is to save, earn interest and enjoy easy access to your money at any time, a traditional savings account is a good option.
Is it better to save money or just time?
Saving money is great, but often saving money requires spending some of your time. Put another way, saving money might cost you some time. While you can always make more money, you'll never regain spent time. Deciding when to spend money to save time is a key part of our financial lives.
First, you'll need to decide how much you're going to invest, with a minimum deposit of $5,000. How often you want to receive interest payments… And lastly, what to do at the term's end: withdraw the balance of the term deposit or roll it over.
Time deposits are considered as stable and safe investments as they give depositors regular and guaranteed returns - suitable for investors who prefer low returns with known risks.
Can I withdraw some of my funds while my Time Deposit Plus is still active? No, you cannot withdraw money from your Time Deposit Plus account before its due date. However, should you want to move out your money, you can cancel your account.
| Banks | Highest FD rate (% p.a.) | 1-year FD rate (% p.a.) |
|---|---|---|
| Unity Small Finance Bank | 9.00 | 7.85 |
| North East Small Finance Bank | 9.00 | 7.00 |
| Suryoday Small Finance Bank | 8.60 | 8.25 |
| Shivalik Small Finance Bank | 8.55 | 6.00 |
