6 Things to Look for in a Time Deposit Product for Growing Your Money

Both traditional and digital banks offer a range of financial products that can help grow your money. For instance, time deposits have a higher interest rate compared to regular savings accounts, making them an excellent place to park your money and boost your savings. Opening a time deposit account, however, involves you depositing funds for a fixed period, usually between a few months to several years. You’re also advised not to touch it until the fixed term is over to receive the interest in full. 

Due to the terms and conditions of a time deposit account, it’s ideal you open an account from a financial institution that offers the best features to ensure the safety of your investment. Here are some things you need to consider when looking for a time deposit product for growing your money:

The Bank’s Reputation

When considering a time deposit product to grow your money, it’s essential to evaluate the reputation of the bank offering the deposit. This serves as a crucial indicator of the institution’s reliability, stability, and trustworthiness. Institutions that have built a strong reputation over time are also more likely to adhere to regulatory standards, ensuring that your investment is protected. Finally, they prioritize customer service, offering personalized assistance and guidance to help you make informed financial decisions. Simply put, opting for a time deposit from a well-established and reputable bank provides peace of mind.

Additionally, a financial institution with a solid reputation employs robust security measures and offers insurance coverage to protect your money from various threats. For example, a reputable digital bank regulated by the Bangko Sentral ng Pilipinas and insured by the Philippine Deposit Insurance Corporation is better able to protect its users and their money. Therefore, it’s a safe bank digital savvy consumers can open a time deposit account for financial gain.

Interest Rates

The interest rate determines the amount of return you’ll earn on your time deposit over the specified term. Obviously, higher interest rates can impact the growth of your funds, allowing you to maximize your returns and achieve your financial goals more efficiently. However, it’s essential to compare interest rates across different institutions and terms to find the most competitive option. Through a careful evaluation of the interest rates offered by various institutions, you can make an informed decision and optimize the growth potential of your investment.

For instance, Maya—a fintech company in the Philippines—has a time deposit product called Time Deposit Plus. It offers a guaranteed 3.5% p.a. at the start of the term, which is typically higher than what most traditional banks offer. This interest rate can be further boosted when you reach your target amount and date, thus maximizing your money’s income potential. 

Term Length

Another important consideration when selecting a time deposit product is the term length or maturity period. It refers to the duration for which your funds will be locked into the deposit before you can access them without incurring penalties. Different financial institutions offer a variety of term lengths, ranging from a few months to one year or more. Usually, time deposits with shorter terms offer lower interest rates, However, they provide greater flexibility by allowing you to access your funds sooner if needed. On the other hand, time deposits with longer terms often offer higher interest rates but require an extended commitment period. So, when choosing the term length for your time deposit, consider your financial goals, liquidity needs, and risk tolerance. Opening an account with the right term length ensures that your investment aligns with your objectives and allows you to maximize the benefits of compound interest.

Minimum Deposit Requirements

Before opening a time deposit account, make sure to consider the minimum deposit requirements set by the bank. Minimum deposit requirements often vary. Some institutions may offer lower minimum deposits for certain types of accounts or promotional offers, making it easier for those with limited funds to take advantage of higher interests. Others may have higher minimum deposit requirements but come with additional benefits, such as preferential interest rates or waived fees. Understanding these requirements is crucial in helping you plan your finances as you lock in the initial funds in a time deposit account. 

Do note that there are also time deposit products that don’t have minimum balance requirements, like Maya’s Time Deposit Plus. This makes it more accessible to those who don’t have a large amount to deposit immediately. Moreover, Time Deposit Plus also requires a low total goal amount of at least Php 5,000 only, which means you can start earning boosted interest rates.

Early Withdrawal Penalties

Early withdrawal penalties are fees charged for accessing your funds before the specified maturity date of the time deposit. These penalties can vary and may include a percentage of the withdrawn amount or a loss of accrued interest. In ideal situations, you’ll keep your money in the time deposit account until the term is completed. However, there may also be situations in which you have to withdraw your money early. As such, you must carefully review the terms and conditions regarding early withdrawals to understand the potential consequences. While some institutions may offer more lenient penalty structures, others may impose substantial fees that can significantly impact your overall returns. 

Renewal Options

Renewal options dictate what happens to your deposit once it reaches maturity. Some institutions may automatically renew the deposit for another term unless instructed otherwise, while others may require manual renewal or offer the choice between renewal and withdrawal. Understanding your options allows you to plan ahead and make decisions that align with your financial goals and preferences. Automatic renewal can be convenient, ensuring that your funds continue to grow without interruption. However, it’s essential to review the terms and conditions associated with renewal, including any changes in interest rates or fees. Explore renewal options beforehand so you can avoid unexpected outcomes and maintain control over your investment strategy.

Selecting the right time deposit product is a crucial step in growing your money and achieving your financial goals. By considering these factors, you can make informed decisions that align with your needs and preferences, making it easier to choose a time deposit product that’s right for you.