Short Term Deposit

Short Term Deposit Meaning:
In deposit terminology, the term Short Term Deposit refers to an amount of money placed in a bank or financial institution for a term no longer than one year. A Short Term Deposit will usually earn a fixed rate of interest.

For example, Short Term Deposits will often be offered by banks and financial institutions with a fixed rate of interest and maturity date. The depositor of the funds does so with the understanding that the funds will not be available to them until the maturity date of the investment arrives. In return, the bank or financial institution pays a higher interest rate to the depositor. Short Term Deposits are also known as time or term deposits, with perhaps the most popular name being short term certificates of deposit or CDs. Short Term Deposits are ideal for investors who are willing to give up liquidity in exchange for earning a higher interest rate than that available on an ordinary savings account. They also usually provide a relatively high degree of safety that depends on the credit quality of the issuing financial institution.