Regular accounts or even current accounts do not offer much interest. Therefore, one of the best options that customers can opt for a time deposit schemes. Time deposit is a scheme that allows customers to keep a certain amount aside for a particular amount of time, over which an interest charge is added. The only catch is that, these amount must not be withdrawn before the maturity period, if not customers will receive a penalty from the financial institution or bank.
This type of an investment is also risk free and and customers will also receive an additional amount at the end of the term depending on the interest rate added.
The Time Deposit Interest Rate in Philippines is dependent on many factors such as the time period for which the deposit is made. The longer the term, higher is the interest provided. The tenure offered ranges from six months to up to five years. Another factor that determines the rate of interest, is the amount invested. Again, higher the amount invested, higher is the rate of interest that the customer receives. Certain banks also have a minimum deposit amount requirement.
Although the advantages of time deposits are many, there are certain disadvantages as well. One of the most significant one is that, time deposits are non-liquefiable. This means that, customers will not be able to withdraw the amount deposited at any given point of time unless the maturity of the term is attained. Withdrawing prior to the end of the term will attract penalty or not receiving the amount of interest. In addition to these, they may also have to pay release charges.
Another disadvantage is that, customers will be unable to take advantage of rates of interest, as this is fixed in the beginning itself.
In addition to this, although returns are guaranteed, the amount is not very significant.
Time deposits, as mentioned previously, are one of the more popularly procured savings option in the Philippines. Customers will have to weigh in the pros and cons and then opt for the scheme.