YOU ASK:
What is the definition of Time Deposit?
WE ANSWER:
A Time Deposit refers to funds that are placed inside a bank or a depository institution, which is "locked" for a specified period and cannot be withdrawn without a penalty or without prior notice by the depositor. There is a set interest rate that would be paid for funds kept for that period.
Once the time has expired, the depositor has the choice of either withdrawing the funds or depositing it in the bank for another time period.
Time deposits generally provide interest rates that are higher than the interest rates given to demand deposits (which the depositor can withdraw without prior notice or penalty).
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