Demand and Time Deposits

Multiple banks and other financial intermediation entities have different services and products that adjust to the needs and economic interests of individuals and companies.

Among the products offered by these entities are bank deposits, allowing their clients to safely safeguard their resources.

There are different types of bank deposits, which differ in aspects such as availability and profitability obtained from the funds. On this occasion we will deal with two of them, known as demand deposits and time deposits.

Demand Deposits

These are funds held by the customer in a current account, which can be accessed at any time for payment or withdrawal purposes.

Demand deposits in a checking account allow payments to be made by check or by wire transfer. Also, some or all of the money can now be withdrawn using a debit card linked to the account.

Due to the ease with which the user can dispose of the money, demand deposits provide a higher level of liquidity, being useful to meet daily or fixed expenses.

Time Deposits

This refers to the money deposited by a customer in a financial institution, establishing a specific period of time to withdraw it again.

Unlike demand deposits, time deposits have more limited access. Usually, the depositor makes an agreement with the institution to withdraw it after the fixed term has expired. In the event that the client is interested in accessing the money before the established time, he/she will have to pay a penalty for early withdrawal.

Although they can be used as a savings instrument, time deposits are also an investment option, since the depositor receives a remuneration for the time he/she will keep the funds in the entity.

In time deposits, the return is higher than that which can be obtained through demand deposits.

In conclusion, it should be noted that the choice of any of these or other deposit options will depend on the objective pursued by each client, whether it is to save with the possibility of using their resources immediately or to make some type of short or long-term investment.