Time Deposits
Time deposits, as against the need deposits, are made for a fixed period of time for a fixed or pre-decided interest rate. In case of time deposits, there is a date of maturity and banks don't permit pre-mature withdrawal of money. If the depositor requirements money urgently, then he will have to pay a penalty towards the bank for this activity. Withdrawing money from a time deposit isn't as easy as the demand deposits, because the account holder needs to give a written notice to the bank for obtaining the money.
The best part of the time deposits is that the interest rate is high as the banks are able to use this public money for a longer time of time in this kinds of deposits. Banks have several schemes and plans where the amount of returns earned by the depositors increase using the time of investment. So, time deposits are to be produced with a long term investment perspective. After completion from the deposit period, you either get your money back or can continue the scheme to obtain even higher returns. The funds in time deposits tend to be protected by Federal Deposit Insurance Corporation. In many nations, the time deposits are also known as fixed debris or term deposits.
Main Types of Time Deposits
Fluid CD's
Liquid Certificates of Deposits (CD's) are helpful with regard to investors because here, you get the option of withdrawing your money without any type of penalty charges. The maximum amount of money which could be withdrawn is decided by the bank.
Traditional CD's
These deposits include one to five-year deposit period and with restrictions upon withdrawal. Penalties are levied on early withdrawal for conventional CD's.
Brokered CD's
Broker bought CD's are fist purchased because of your broker and then sold to you, and have deposit period ranging from a week to greater than a year.
Time Deposit Types
There are many examples of time deposits which will help you understand this concept. Here are the types of time deposits explained one following the other.
Renewable Time Deposits
Renewable time deposits are those deposits that will get automatically renewed on attaining the maturity date that's given by the bank. Renewable deposits help in spreading investor wealth and increase their net worth substantially.
One-Time Period Deposits
One-time time deposits are deposits in which the depositor keeps money using the bank for a specific period and then withdraws the money combined with the interest amount. Such deposit schemes help investors get big sum of money, in bulk, which can be used in making large purchases.
Fixed Time Deposits
Fixed time deposits allow their investors to withdraw their entire money before maturing from the deposit, on payment of fees to the bank.
Versatile Time Deposit
Flexible time deposits are more advantageous when compared with fixed time deposits because here, you get higher rates of interest from banks, and the facility to withdraw your cash partly before maturity.
Standard Time Deposits
Standard time deposits are the kinds of time deposits in that you've the freedom of setting maturity instructions and choosing your own deposit currency. These are being offered by leading multinational banking institutions.
Term Deposit with Interim Interest
The best part of the deposit is the receipt of interim interest in the time of the deposit. Like in the standard time debris, you can also choose your deposit currency and arranged your maturity instructions.
So, these were the several types of time deposits that can generate good wealth later on. Smart investments made at the right age can assist you to secure your future financially and enjoy your life. Therefore, take the right decisions and benefit from the exciting offers on the market.