what is the difference between demand deposit ,time deposit an saving depost
Answers
Demand deposits and term deposits refer to two different types of deposit accounts 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 the amount of interest that can be earned on the deposited funds.
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.
Funds cannot be withdrawn from a term deposit account until the end of the chosen time period without incurring a financial penalty, and withdrawals often require written notice in advance. At the end of the time period, the depositor has the choice of withdrawing deposited funds plus earned interest, or rolling over the funds into a new term deposit. The most common form of a term deposit is a bank certificate of deposit, or CD.
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, savings accounts or money market accounts.
Demand deposit, term deposit and saving deposit
Explanation:
Demand deposit- Demand deposit is a type of deposit from where the depositor can withdraw the money as and when he needs. such deposit may have joint owners, where both of them have right to withdraw fund from the account.
Term deposit - in this type of deposit money is deposited for specified time period. the depositor can withdraw the money after completion of the time period. it includes deposits like fixed and recurring deposit. in case of emergency the depositor can withdraw the money even before the term completes but bank takes some charges for it.
Saving deposit- Saving deposits are offered by banks to promote small saving by the general public. in case of saving deposit bank even pays interest on the deposited amount so that people make more and more saving with the bank.
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Difference between demand, term and saving deposit
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