Growing Your Savings With Banks

There comes a time when you feel a need to start saving for the future, whether for a specific goal or to insure a certain level of financial security. Thus, it’s necessary to understand the different types of savings products/pools that you can find in a bank. Here are the differences between savings account, time deposits and certificates of deposit:

Savings Account
Savings account is an interest-bearing account. This type of account does not have a maturity date, allowing you to withdraw & deposit funds at any time. The interest for the savings account is calculated on the minimum account balance during the month and is deposited in your account on periodic intervals (commonly monthly). 

Time Deposit 
Time deposit is an interest-bearing bank deposit account that has a specified date of maturity. Time Deposits (TDs) are held for a fixed term mostly short-term, commonly one week to a year. TDs are highly customizable & flexible, where the interest rate could be negotiable depending on the amount deposited & on the liquidity available at the bank. The interest can be added to your account periodically or upon maturity, based on your agreement with the bank. Early redemption may result in loss of earnings due to early redemption fees, but does not affect the original deposit amount. Upon maturity, the bank can may renew the TD in addition to the earned interest based on your request.

Certificate of Deposit
Certificate of deposit (CD) is a saving product/pool with more fixed features. The CD allows you to maintain a certain amount of money for medium or long-term periods of time, commonly 3 to 7 years, with interest rate that is usually higher than that of the time deposit’s. The interest is deposited in your account in fixed intervals (monthly, quarterly, etc.). The CD cannot be redeemed before the laps of 6 months from its date of purchase. Similar to TDs, early redemption may result in loss of earnings.



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Mariam Hatem - 04/04/2019

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