Time deposit


Time deposit

A time deposit (also known as a term deposit, particularly in Canada, Australia and New Zealand; a bond in the United Kingdom; fixed deposits Fixed Deposits in India and in some other countries) is a money deposit at a banking institution that cannot be withdrawn for a certain "term" or period of time (unless a penalty is paid)[citation needed]. When the term is over it can be withdrawn or it can be held for another term. Generally speaking, the longer the term the better the yield on the money. A certificate of deposit is a time-deposit product.[citation needed]

The opposite is a demand deposit also known as sight deposit or "on call" which can be withdrawn at any time, without any notice or penalty; e.g., money deposited in a checking account or savings account in a bank.

The rate of return is higher than for savings accounts because the requirement that the deposit be held for an integer multiple of the term gives the bank the availability to invest it in a higher gain financial product class. However the return on this type of product is generally lower than that of investments in riskier products like stocks or bonds.

A deposit of funds in a savings institution is made under an agreement stipulating that (a) the funds must be kept on deposit for a stated period of time, or (b) the institution may require a minimum period of notification before a withdrawal is made.

Contents

US time deposits regulations

The "M2" definition of money supply includes funds that can be used directly in payment, such as money market mutual funds and money market deposit accounts (MMDAs). MMDAs are considered by the United States Federal Reserve (the Fed) to be savings accounts and are thus exempt from reserve requirements. These large transaction accounts not being included in the M1 money supply suggests that the Fed does not pay much attention to ordinary deposits, and in July 2000, it announced that it was no longer setting target ranges for growth rates of the money supply.

Small-denomination time deposit

"Small" time deposits in M2 are defined as those under $100,000.

Large-denomination time deposit

"Large" time deposits are currently defined as deposits larger than $100,000. The term "jumbo CD" is commonly used in the United States. Some banks, recognizing that customers do not want more in the bank than is covered by insurance, have lowered the "jumbo CD" minimum requirement to $95,000, so with compounded interest the total falls below the insurance limit.

See also

External links


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Look at other dictionaries:

  • time deposit — see deposit 2a Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. time deposit n …   Law dictionary

  • time deposit — ☆ time deposit n. a bank deposit payable at a specified future date or upon advance notice …   English World dictionary

  • time deposit — A deposit with a specific maturity. Usually, but not always, a certificate of deposit. American Banker Glossary Interest bearing deposit at a savings institution that has a specific maturity. Related: Certificate of deposit . Bloomberg Financial… …   Financial and business terms

  • Time deposit — Interest bearing deposit at a savings institution that has a specific maturity. Related: certificate of deposit. The New York Times Financial Glossary * * *    ► See CD. * * * time deposit UK US noun [C] (also fixed deposit) BANKING, FINANCE ► a… …   Financial and business terms

  • time deposit — A deposit of money in an interest bearing account for a specified period. In the USA, a time deposit requires at least 30 days notice of withdrawal …   Big dictionary of business and management

  • time deposit — time′ depos it n. bus a bank deposit that can be withdrawn without penalty only after a specified period of time • Etymology: 1850–55, amer …   From formal English to slang

  • time deposit — Banking. a deposit that can be withdrawn by the depositor only after giving advance notice or after an agreed period of time has elapsed. [1850 55, Amer.] * * * …   Universalium

  • time deposit — noun a deposit in a bank that cannot be withdrawn before a specified date Syn: term deposit …   Wiktionary

  • time deposit — /ˈtaɪm dəpɒzət/ (say tuym duhpozuht) noun a deposit that can be withdrawn by the depositor only after the depositor has given advance notice, or after a period of time agreed upon has elapsed …   Australian English dictionary

  • time deposit — noun a certificate of deposit from which withdrawals can be made only after advance notice or at a specified future date • Hypernyms: ↑certificate of deposit, ↑CD …   Useful english dictionary


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