{{Short description|Bank account with a fixed maturity date}} {{one source|date=August 2020}} {{Banking |accs/cards}} A '''time deposit''' or '''term deposit''' (also known as a '''[[certificate of deposit]]''' in the [[United States]], and as a '''[[guaranteed investment certificate]]''' in [[Canada]]) is a [[Deposit account|deposit]] in a [[financial institution]] with a specific [[Maturity (finance)|maturity date]] or a period to maturity, commonly referred to as its "term". Time deposits differ from ''at call deposits'', such as [[Savings account|savings]] or [[checking account]]s, which can be withdrawn at any time, without any notice or penalty. Deposits that require notice of withdrawal to be given are effectively time deposits, though they do not have a fixed maturity date.
Unlike a certificate of deposit and [[Bond (finance)|bond]]s, a time deposit is generally [[Nonnegotiable and negotiable instruments|not negotiable]]; it is not transferable by the depositor, so that depositors need to deal with the financial institution when they need to prematurely cash out of the deposit.
Time deposits enable the bank to invest the funds in higher-earning financial products. In some countries, including the United States, time deposits are not subject to the banks’ [[reserve requirement]]s, on the basis that the funds cannot be withdrawn at short notice. In some countries, time deposits are guaranteed by the government or protected by [[deposit insurance]].
==Interest== Time deposits normally earn [[interest]], which is normally fixed for the duration of the term and payable upon maturity, though some may be paid periodically during the term, especially with longer-term deposits. Generally, the longer the term and the larger the deposit amount the higher the interest rate that will be offered.<ref>{{Cite web |url=http://www.investopedia.com/terms/t/timedeposit.asp |title=Time Deposit|date=2003-11-24|website=Investopedia|language=en-US|access-date=2016-11-01}}</ref>
The interest paid on a time deposit tends to be higher than on an at-call savings account, but tends to be lower than that of riskier products such as stocks or bonds. Some banks offer [[Market-linked CD|market-linked time deposit accounts]] which offer potentially higher returns while guaranteeing principal.
==At maturity== At maturity, the principal can be either paid back to the depositor (usually by a deposit into a bank account designated by the depositor) or rolled over for another term. Interest may be paid into the same account as the principal or to another bank account or rolled over with the principal to the next term.
The money deposited normally can be withdrawn before maturity, but a significant penalty will normally be payable.
==See also== * [[Federal Deposit Insurance Corporation]] * [[Canada Deposit Insurance Corporation]] * [[Guaranteed investment certificate]] * [[Money supply]]
== References == {{Reflist}}
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[[Category:Bank deposits]] [[Category:Interest-bearing instruments]] [[Category:Investment in the United States]]