What is Fixed Deposit Account? What is Time Deposit?

The fixed deposit account is like the form of agreement between the customer and the service providers like banks and other financial institutions regarding the placement of certain deposit amount for the particular time period in a specific interest rate.

Term Deposit Account Or Fixed Deposit Account Or Time Deposit Account?

In different countries, people call a fixed deposit by various names like term deposit, time deposit, certificate of deposit (CD), bond, and so on.

Unless the contract or the maturity period of such account expires, the principal amount or the deal amount cannot be withdrawn from the account.

And the dealt interest rate is also invariable till the deal expiry date. The interest rate in such account type is on higher side proportional to the deposit size and time period.

The payment of interest rates may occur monthly, quarterly, semi-annually, or annually. But, the principal amount is to be paid only after the maturity period.

About Fixed Deposit Account What is Fixed Deposit Account | De Reviews

Therefore, breaking the deal before the maturity period is not allowed. In case of urgent need for money due to emergencies, the service provider may offer a loan against your Fixed Deposit at a competitive interest rate.

The service provider may also allow to premature the deal i.e. breaking the deal before the expiry date, taking a certain percentage of penal charges for early withdrawal. But the customer needs to prior inform the service provider about the requirement of fund and termination of the contract.

This account is also the attraction of the service provider. Hence, they are constantly attempting to maintain a certain percentage of this deposit in their total portfolio. This is because they can get the money from the public for a longer duration to enhance their business as well as profitability.

They invest such funds in long-term businesses and financial products with a higher return or in short-term financing having regular maturity. Thus they are willing to pay the higher rate of return to the customers in their money.

Some Of The Major Indications Of Fixed Deposit/Term Deposit/Time Deposit Accounts are:

  • Both individuals and artificial persons or entities can open a fixed deposit.
  • Fixed Deposit Receipt (FDR) or Certificate of Deposit (CD) is provided to the customer as a certificate of deposit from service provider after opening the account.
  • Once you open a this account, it is not available for any type of transactions.
  • The interest rate is on the higher side. It always depends upon the volume of fixed deposit amount, maturity period and offerings of service providers.
  • The account has a fixed interest rate for a specified time period, i.e., until the maturity period.
  • You can open a fixed deposit for a range of periods. From a short duration, such as one month, to a very long period, up to 10 years.
  • To initiate a new deal or open a new fixed deposit, a separate account must be opened.
  • You can renew a this account for a further period with the prevailing interest rate and offerings after its maturity.
  • If the customer is not willing to renew the contract, then the money can be withdrawn from the service provider.
  • In all cases, individuals must surrender the FDR or CD to the service provider after the fixed deposit matures.


Fixed deposit encourages people to save money in terms of long-term investment with a comparatively higher rate of return. A fixed deposit can be one of the safest investments, especially for low-risk investors.

In most cases, fixed deposits are protected by deposit insurance. However, the coverage amount can differ based on the regulatory policies and guidelines of each country or service provider.

Now you know the fixed deposit definition/term deposit definition/time deposit definition. So now if you have to say something about the fixed deposits, then please feel free to use our comment section as below.

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