What is a Time Deposit?
The time deposit is a common form of savings that place restrictions on when a depositor can withdraw funds from the investment. The two most common examples of a time deposit are the savings account and the Certificate of Deposit. A financial institution such as a bank, credit union, or a savings and loan institution usually holds the time deposit. With a time deposit, there is usually one of two provisions that govern the structure of the savings strategy. First, the account may be set with a fixed term that does not allow the depositor to withdraw any funds until a certain amount of time has passed. This time frame generally coincides with the schedule for applying interest to the balance maintained within the account. If national banking regulations governing the time deposit allow for emergency withdrawal of funds from a fixed term account, it is often still possible for the financial institution to impose sizable penalties. The second common approach to a time deposit is more lib
Time deposits are savings accounts at a bank where the funds are unavailable for withdrawal for a predetermined period of time. In exchange for the lack of liquidity, banks offer a higher yield on time deposits than they offer on regular savings accounts. The most common type of time deposit in the United States is the Certificate of Deposit, or CD. Certificates of Deposit are offered in any amount and in terms ranging from one month to several years. The longer the term and the higher the deposit amount, the greater the annual yield.
