A time deposit can basically be described as a kind of saving plan that places restrictions on the when a depositor can withdraw funds from the savings plan. As a norm, time deposit saving plans usually mature after one year.
However, the time frame varies from one saving plan to another with some of the time deposit plans having a maturity timeline of as little as 3 months with others having a higher maturity time frame of even 3 years. Whichever the case, it is in the best interest of a depositor to know how to compare time deposit rates so as to be able to get the most out of an investment.
The following is an overview of some of the factors that govern interest rates and how to select the time deposit best cut out for you
Long term or short term
Time deposits are usually available in either long term or short term with varying time deposit interest rates. Short term time deposits are usually placed for less than a year and are suitable for individuals who have short time saving goals. Long term time deposits usually last for more than a year with some going up to a period of 5 years.
The time deposit interest rates usually depend on the time period of the plan with plans having a longer time frame attracting a much higher interest rate when compared to short time plans
For individuals looking for ways of how to compare time interest rates, the fees charged are an important factor to consider as they will ultimately have an impact on the returns. As a norm, most time deposit accounts do not have any extra fees such as establishment fees, setup fees or even ongoing fees. However, it would be in your best interest to check out the fine print just in case there are such fees
It is important to note that, there is a penalty fee for withdrawing the deposit before the maturity period. It is important for an individual to pay close attention to the penalty as it will have a big impact on the returns. Some institutions have the penalty fee as a fixed percentage of the total deposit while other calculate it as a percentage of the time deposit rate, by carrying out a comparison, you can be able to make the best decision.
By considering the above factors on how to compare time deposit interest rates, you are assured of getting the best rates for your time interest deposit…