A time deposit is a bank product that put deposit of money to be on holding period so the depositor can only get the money after that period without penalty. If, for instance, you want to check out the money in a term deposit, you will be charged a penalty for withdrawing it prior to the maturity date. In term deposit, the longer the holding period, the higher the interest and so the profit from it. In US, a time deposit is called certificate of deposit or CD.
If you have an ample amount of excess money, say, , 000 it is advisable to invest it in time deposit or certificate of deposit rather than on normal savings account.
Keep in mind the money deposited in a time deposit or term deposit cannot be withdrawn before the maturity date on the other hand you can get your money on a savings account any moment you want.
There is a certain charge or penalty you must pay whenever you like to withdraw your money in time deposit prior the maturity date ends.
Therefore, it is advisable to finish the holding period before withdrawing money from term deposit except you desperately needed the money.
If you are thinking to put some of your money in term deposit, make sure that you have still adequate money in your bank account to cover for unexpected needs. The excess money can be deposited to term deposit for higher profit.
One advantage of investing money in time deposit or CD is that it earns higher interest rate than regular bank account.
If you put your money in time deposit, it is insured by the bank and the government up to P500,000 in the Philippines. In the US, certificate of deposit is also insured by FDIC or NCUA.
You can choose where to invest your money, in savings account or term deposit. Bear in mind that money in term deposit earns bigger interest with lock-in period while money on savings account gives low interest with high liquidity.
In order to apply a time deposit account, you should visit the bank of your choice or you can apply in the Internet. One bank that gives good interest rates in the Philippines for term deposit is BPI.