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Guilherme Mazui

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What is the Difference Between Term Deposit and Fixed Deposit?

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Term deposit and fixed deposit are both popular investment options that allow investors to deposit a certain amount of money for a fixed period of time in return for a guaranteed interest rate. However, there are some differences between the two that one should consider before investing:

  1. Maturity Period: Term deposits generally have short maturity periods, ranging from one week to five years. Fixed deposits, on the other hand, have a lock-in period that can range from one month to 10 years.
  2. Interest Rates: Fixed deposits provide a fixed interest rate, while time deposits may offer a floating or variable interest rate based on market performance.
  3. Withdrawal Restrictions: Term deposits may have more flexible withdrawal options compared to fixed deposits.
  4. Investment Type: Term deposits are also known as certificates of deposit or recurring deposits. Fixed deposits are a type of term deposit account that offers a fixed interest rate.

In summary, term deposits typically have shorter maturity periods and may offer variable interest rates, while fixed deposits have longer maturity periods and provide fixed interest rates. The choice between the two depends on the investor's goals and financial situation.

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  • What is the Difference Between Term Deposit and Fixed Deposit?
  • Comparative Table: Term Deposit vs Fixed Deposit

    • Comparative Table: Term Deposit vs Fixed Deposit

    Here is a table comparing the differences between term deposits and fixed deposits:

    Feature Term Deposit Fixed Deposit
    Definition Term deposits, also known as time deposits, are investments made by depositing a specific amount of money with a financial institution for a predetermined period at an agreed-upon interest rate. Fixed deposits are financial instruments where you deposit a specific amount of money with a bank or financial institution for a predetermined period at a fixed interest rate.
    Interest Rates Term deposits may provide both fixed and variable interest rates. Some term deposits offer a fixed rate for the entire tenure, while others have a variable rate based on market conditions. Fixed deposits have fixed interest rates that remain constant throughout the deposit tenure, ensuring predictable returns.
    Tenure Term deposits generally have short maturity periods, ranging from one week to five years. Fixed deposits have a lock-in period ranging from one month to 10 years.
    Early Withdrawal In some cases, term deposits may allow early termination or withdrawal if the account holder gives several days' notice. A penalty may be assessed for early termination. Early withdrawal of funds from fixed deposits is possible, but penalties and reduced interest returns may apply.

    Both term deposits and fixed deposits are popular investment options that allow investors to grow their money in a secure and predictable manner. Understanding the differences between these two options can help individuals make informed decisions about their savings.

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    Guilherme Mazui

    Guilherme Mazui is graduated in journalism from the Federal University of Minas Gerais (UFMG) and a master's degree in Communication from the University of São Paulo (USP). In addition, he has experience in advertising writing and has worked as a content editor in several companies.