Question

difference between demand deposit and time deposit

Answer 1

Demand deposits and term depositsrefer to two different types of depositaccounts available at a bank or similar financial institution, such as a credit union. Demand deposits and term deposits differ in terms of accessibility or liquidity, and in theamount of interest that can be earned on the deposited funds.

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Answer 2

Term Deposits

Term deposits, also known as time deposits, are investment deposits made for a predetermined period of time, ranging from a few months to several years. The depositor receives a predetermined rate of interest on the term deposit over the specified time period. Funds deposited for longer time periods command a higher interest rate. Term deposit accounts pay a higher rate of interest than traditional savings accounts.



Demand Deposits

Demand deposit accounts offer greater liquidity and ease of access as compared to term deposits but pay lower interest rates, and they may also include various fees for handling the account. Depositors can withdraw any or all of the funds in a demand deposit account at any time without penalty or prior notice required.

Funds a depositor may need to access at any time that provide the depositor with sufficient personal liquidity to handle his or her regular expenses should be kept in a demand deposit account. Examples of demand deposit accounts include regular checking accounts,