If you've only just begun to consider investing, putting your funds in a time deposit account is a good way to start


Definition of 'Time Deposit'

A savings account or certificate of deposit (CD) held for a fixed-term, with the understanding that the depositor can make a withdrawal only by giving notice. A time deposit is an interest-bearing bank deposit that has a specified date of maturity. A bank is authorized to require depositors to give 30 days notice before withdrawing funds from a savings account; however, passbook accounts are typically considered readily available funds and account holders can make withdrawals without giving advance notice. Certificates of deposit are issued for a specified term, such as 30 days (the minimum) up to five years. Although funds can be withdrawn from CDs without notice (on demand), there are penalties for early withdrawal. Investopedia Says Investopedia explains 'Time Deposit'

Banks and other financial institutions can negotiate any maturity term (the length of the deposit) that a customer requests, as long as the term is a minimum of 30 days and interest is paid. Once maturity is reached, the funds can be withdrawn without penalty, or it can be renewed and held for an additional term. In most cases, the longer the term, the higher the interest rate will be. For example, a one-year certificate of deposit may offer a 1.10% APY, while a five-year CD for the same amount might provide a 1.75% APY. In addition, larger CDs (those with a higher deposit) generally offer more favorable interest rates.

Time Deposit Meaning: In deposit terminology, the term Time Deposit refers to a savings account or certificate of deposit that pays a fixed rate of interest until a given maturity date. Funds placed in a Time Deposit usually cannot be withdrawn prior to maturity or they can perhaps only be withdrawn with advanced notice and/or by having a penalty assessed.

"Deposit account paying interest for a fixed term, with the understanding that funds cannot be withdrawn before maturity without giving advance notice. A time deposit is also known as an investment account or time certificate of deposit. Time deposit accounts, evidenced by either a paper certificate or a statement mailed to the depositor when interest is paid, normally pay a fixed rate of interest, and have maturities of seven days to seven years or longer. The notification of withdrawal requirement ordinarily is waived for consumer deposits, though not for large dollar corporate time deposit accounts. Consumer withdrawals still are subject to an Early Withdrawal Penalty and partial loss of interest. Federal Reserve Regulation Q requires that account withdrawals within six days after being deposited be subject to a loss of six days' interest. Time deposit accounts owned by a corporation (Nonpersonal Time Deposits) are subject toReserve Requirements but at a lower rate than transaction accounts, such as checking accounts. "