In the Philippines, a time deposit or also known as a term deposit is a money deposit in the bank that cannot be withdrawn for a certain “term” or period of time. When the term is over it can be withdrawn or it can be held for another term. Basically, the longer the term the better the yield on the money. In other countries specially in the US, it is called certificate of deposit or CD which is also a time-deposit product.
If you have substantial amount of extra money, say, $10, 000 it is advisable to invest it in time deposit or certificate of deposit rather than on regular savings account.
However, you need to understand that your money in time deposit or CD is in a holding period while money on regular savings account can be withdrawn anytime.
There is a certain fee or penalty you need to pay whenever you want to withdraw your money in time deposit before the maturity date ends.
Thus, it is better to finish the holding period before withdrawing money from time deposit unless you badly needed the money.
So when investing money in time deposit, you must decide how much money will be left on your savings account for emergency needs. The extra money left can be invested in time deposit.
One advantage of investing money in time deposit or CD is that it gives higher interest rate than regular savings account.
In the Philippines, money invested in time deposit is insured by PDIC up to P500, 000 just like money in savings account. In the US, money invested in CDs are insured by the FDIC for banks or by the NCUA for credit unions.
You need to decide where to put your money, time deposit or savings account. If you want higher earnings with assurance of your principal, put it in time deposit. However, if you want more liquidity and emergency fund, put your money on savings account.
In order to open a time deposit account, you need to visit the bank of your choice or you can apply online. One bank that offers good interest rates in the Philippines for time deposit is BPI.
Do you want to open a BPI savings account? You can visit the link below to know procedures and requirements in opening a BPI savings account.
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