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Many people have heard of term deposits, which are savings accounts that pay a higher rate of interest than standard checking and savings accounts. The main advantage of these accounts is that they can be used to help save for big purchases or investments that don’t have quick access to money.

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Term deposit and savings can be redeemable or non-redeemable and come with different maturities. These can range from one month to five years.

There are a variety of term deposit options available from banks and credit unions, such as certificates of deposit (CDs), certificates of participation (COPs), jumbo CDs, and time deposits. Each offers a fixed rate of interest that pays out at the end of the term.

However, term deposits can be risky if interest rates fall before the end of the term. They can also be subject to inflation risk, which is the possibility that prices of goods and services will increase at a faster pace than a customer’s rate of interest earned on a term deposit account.

A term deposit can be a good way to set aside funds for large purchases, such as a home or car. But it may not be the best option if you need to access your money quickly or want a more flexible savings strategy.

Generally, you can’t withdraw your money from a term deposit account before the maturity date. If you do, you’ll typically have to pay a penalty fee. Alternatively, you can roll your term deposit over into another one at the end of its term, but this will likely have a lower interest rate than the original one.

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