What Are Time Deposits and Demand Deposits

Demand deposits consist of funds the account holder can access right away: They are available anytime. The funds in a checking or regular savings account usually consist of demand deposits. In contrast, time deposits, aka term deposits, are not immediately at the account holder’s disposal.

What means time deposit?

A time deposit, also referred to as term deposit, is an interest-bearing bank account with a fixed term. It allows depositors to grow their money with higher interest rates compared to a regular savings account. When the term is over, depositors can withdraw their money or it can be renewed and held for another term.

What are time deposits examples?

A time deposit is an interest-bearing bank account that has a pre-set date of maturity. A certificate of deposit (CD) is the best-known example. The money must remain in the account for the fixed term in order to earn the stated interest rate.