A
time deposit (also known as a
term deposit, particularly in
CanadaA Guaranteed Investment Certificate or GIC is a Canadian investment that offers a guaranteed rate of return over a fixed period of time, most commonly issued by trust companies or banks. Due to its low risk profile, the return is generally less than other investments such as stocks, bonds, or...
,
AustraliaAustralia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the continental mainland , the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans...
and
New ZealandNew Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses , and numerous smaller islands, most notably Stewart Island/Rakiura and the Chatham Islands. The indigenous Māori named New Zealand Aotearoa, commonly translated as The Land of the Long White Cloud...
; a
bond in the
United KingdomThe United Kingdom of Great Britain and Northern Ireland is a sovereign state located off the northwestern coast of continental Europe. It is an island country, spanning an archipelago including Great Britain, the northeastern part of Ireland, and many small islands...
;
fixed deposit in
IndiaIndia, officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the south, the Arabian Sea on the west, and the Bay of Bengal...
and in some other countries) is a money deposit at a
banking institutionA banking institution provides banking services.They include:* Banks* Credit unions* Savings and loan association* Building societies* Non-banking financial company* Some insurance companies...
that cannot be withdrawn for a certain "term" or period of
timeTime is a component of the measuring system used to sequence events, to compare the durations of events and the intervals between them, and to quantify the motions of objects...
. When the term is over it can be withdrawn or it can be held for another term.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
time deposit (also known as a
term deposit, particularly in
CanadaA Guaranteed Investment Certificate or GIC is a Canadian investment that offers a guaranteed rate of return over a fixed period of time, most commonly issued by trust companies or banks. Due to its low risk profile, the return is generally less than other investments such as stocks, bonds, or...
,
AustraliaAustralia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the continental mainland , the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans...
and
New ZealandNew Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses , and numerous smaller islands, most notably Stewart Island/Rakiura and the Chatham Islands. The indigenous Māori named New Zealand Aotearoa, commonly translated as The Land of the Long White Cloud...
; a
bond in the
United KingdomThe United Kingdom of Great Britain and Northern Ireland is a sovereign state located off the northwestern coast of continental Europe. It is an island country, spanning an archipelago including Great Britain, the northeastern part of Ireland, and many small islands...
;
fixed deposit in
IndiaIndia, officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the south, the Arabian Sea on the west, and the Bay of Bengal...
and in some other countries) is a money deposit at a
banking institutionA banking institution provides banking services.They include:* Banks* Credit unions* Savings and loan association* Building societies* Non-banking financial company* Some insurance companies...
that cannot be withdrawn for a certain "term" or period of
timeTime is a component of the measuring system used to sequence events, to compare the durations of events and the intervals between them, and to quantify the motions of objects...
. 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 depositA certificate of deposit or CD is a time deposit, a financial product commonly offered to consumers by banks, thrift institutions, and credit unions....
is a time-deposit product.
The opposite is a
Demand depositA demand deposit or bank money refers to the funds held in deposit accounts in commercial banks. These account balances are considered money and usually form the greater part of money supply.-Bank accounts:...
or a sight deposit 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.
A deposit of funds in a savings institution is made under an agreement stipulating that (a) the funds must be kept on
depositA deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the...
for a stated period of time, or (b) the institution may require a minimum period of notification before a withdrawal is made.
US Time deposits regulations
Note that the
M2In economics, money supply or money stock, is the total amount of money available in an economy at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits....
money supply includes funds that can be used directly in payment, such as money market mutual funds and
money market deposit accountA money market account is a deposit account with a relatively high rate of interest, and short notice required for withdrawals...
s (MMDAs). MMDAs are considered by the
United StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
Federal Reserve (the Fed) to be
savings accountSavings accounts are accounts maintained by retail financial institutions that pay interest but can not be used directly as money...
s 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
depositIn the United States transactions deposit is a term used by the Federal Reserve for checkable deposits and other accounts that can be used directly as cash without withdrawal limits or restrictions. They are the only bank deposits that require the bank to keep reserves at the central bank...
s, and in July 2000, it announced that it was no longer setting target ranges for growth rates of the
money supplyIn economics, money supply or money stock, is the total amount of money available in an economy at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits....
.
Small-denomination time deposit
"Small" time deposits in M2 (see
money supplyIn economics, money supply or money stock, is the total amount of money available in an economy at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits....
) 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
- Certificate of deposit
A certificate of deposit or CD is a time deposit, a financial product commonly offered to consumers by banks, thrift institutions, and credit unions....
- Guaranteed Investment Certificate
A Guaranteed Investment Certificate or GIC is a Canadian investment that offers a guaranteed rate of return over a fixed period of time, most commonly issued by trust companies or banks. Due to its low risk profile, the return is generally less than other investments such as stocks, bonds, or...
- FDIC
- Money supply
In economics, money supply or money stock, is the total amount of money available in an economy at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits....
- Periodic Deposit
Periodic deposit is the investment made in form of equal deposits over a time period regularly. Each deposit recurs after a time interval. Such an investment is made to achieve a pre-planned financial objective and/or when the capital to invest is less....
- Single Deposit
Single deposit is one-time lump sum investment. The Investment is made at the start of the period; grows over the period and matures at the end of the period. Examples of a single deposit are Certificate of Deposits or Fixed Deposits.-Real World Example:...
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