The term deposit is a term that is used in the banking world, to indicate the time in which the deposits remain paralyzed, thus achieving that the client cannot withdraw them. It is classified according to the time and duration of savings. It has advantages (security) and disadvantages (immobility).
Fixed-term deposits are financial products, through which people who wish to do so can deliver a specific amount of money to their trusted bank, thus committing the bank to return said amount plus interest, on the day set for it. The interests generated during the time that the fixed term lasts, will be deposited (regularly or on the due date, as well as the amount deposited) to the checking or savings account that the client must have open in the bank where the contract was signed. the fixed term.
These deposits can be classified according to the time and permanence of the savings: they will be short-term when it is monthly or quarterly. Medium term if it covers semesters or first years. Long-term when the maturity date of the deposits is greater than 5 years.
The fixed term can be transformed into indefinite, if the person chooses the automatic renewal option; extending the term to the same magnitude of time. However, the client can revoke this instruction, giving advance notice and in writing, before the expiration date arrives.
When the term is short, the profitability is prone to decrease for the investor, because the availability of the invested money is extended. Now, when the term is long-term, it tends to benefit the different interest rates, thus offsetting the longer immobilization of money.
Among its main advantages are: higher profitability, easy hiring, security, the investment is guaranteed. However, its disadvantages may appear, some of them are: they generate taxation, immobilization, some products are not very profitable compared to others, in addition to the collection of commissions that some banks establish.
