A time deposit (also known as a term deposit, particularly in Canada, Australia and New Zealand; a bond in the United Kingdom) is a money deposit at a banking institution that cannot be withdrawn for a certain "term" or period of time. When the term is over it can be withdrawn or it can be held for another term. Generally speaking, the longer the term the better the yield on the money. A certificate of deposit is a time-deposit product.
The opposite is a sight deposit which can be withdrawn at any time.
A deposit of funds in a savings institution is made under an agreement stipulating that (a) the funds must be kept on deposit for a stated period of time, or (b) the institution may require a minimum period of notification before a withdrawal is made.
US Time deposits regulations
Note that the M2
money supply includes funds that can be used directly in payment, such as money market mutual funds
and money market deposit accounts
(MMDAs). MMDAs are considered by the United States Federal Reserve
(the Fed) to be savings accounts
and are thus exempt from reserve requirements. These large transaction accounts
not being included in the M1 money supply suggests that the Fed does not pay much attention to ordinary deposits
, and in July 2000, it announced that it was no longer setting target ranges for growth rates of the money supply
Small-denomination time deposit
"Small" time deposits
in M2 (see money supply
) are defined as those under $100,000. That figure is also the limit on FDIC
Large-denomination time deposit
"Large" time deposits
are currently defined as deposits larger than $100,000. The term "jumbo CD" is commonly used in the United States. Some banks, recognizing that customers do not want more in the bank than is covered by insurance, have lowered the "jumbo CD" minimum requirement to $95,000, so with compounded interest the total falls below the insurance limit.