Investing in a Bank Term Deposit

Term deposits are financial instruments that offer a fixed rate of interest. They are typically sold by banks, thrift institutions and credit unions. They are FDIC-insured, which means that the money in the account is protected from bank failure.

What are examples of term deposits?

Investing in a term deposit is a good idea for people who want to save and earn high rates of interest. It can be especially helpful if you are saving for a big purchase such as a car or a wedding.

Choose a term that suits your needs

You can choose to invest in a term deposit with a term length from one month up to five years, depending on the purpose of the investment. Generally, the longer the term, the higher the interest rates are likely to be. URL :

Locking in a higher interest rate can have its downsides, however: If interest rates go up during the term you’ve chosen, you won’t be able to take advantage of any lower rates. You’ll also be locked in for the full term unless you give 31 days’ notice or prove hardship.

Some banks offer a cooling-off period that lets you cancel your term deposit and get back your principal without paying any interest. Alternatively, you can withdraw your money before the term is up, but you may need to pay a fee and lose some of the interest earned.