Term Deposit Rates
In deposit terminology, the phrase Term Deposit Rates refers to the amount of money in interest paid on the maturity date for a specified amount of money placed in a Term Deposit. Term Deposits generally carry a fixed rate of interest.
For example, a Term Deposit Rate for a one year investment of $10,000 is 0.37%, which would mean that at the end of the term — one year — the holder of the Term Deposit would receive interest of $37.00, plus their principal, when the instrument matures one year from the deposit’s inception. Term Deposits must be held to term, or until maturity, while funds placed in Demand Deposits are available at any time to the investor. Early withdrawals of funds from a Term Deposit generally require advance notice and incur a penalty. Term Deposit Rates are generally higher than Demand Deposit Rates, with financial institutions generally paying a premium for funds made available to them for a set period of time.