A time deposit or commonly known also as term deposit is a money deposited in the bank which you cannot withdraw any time since it is on the lock-in period. After the lock-in period, you are free to withdraw the money or deposit it again for another term. In banking, the longer the lock-in period, higher the net gain from time deposit. In other countries like US, time deposit is known as certificate of deposit or CD.

As an example, say you have a surplus amount of money like $5,000, it would be better to put in certificate of deposit or time deposit than sleep it in your regular savings account.

Please keep in mind the money in time deposit or CD is in a lock-in period while money on a savings account can be withdrawn any moment you need it.

Keep in mind that there is a penalty charge you need to pay if you will withdraw the money in a time deposit during its holding period.

Thus, it is better to finish the holding period before withdrawing money from time deposit unless you badly needed the money.

So when investing money in time deposit, you must decide how much money will be left on your savings account for emergency needs. The extra money left can be invested in time deposit.

One good benefit of putting your money in term deposit is that it has higher interest than savings account.

Investing your money in time deposit is insured by PDIC up to P500,000, same with money in savings account. There is a guarantee that your principal will not be loss. In USA, money invested in certificate of deposit is insured by FDIC or NCUA.

You have the responsibility where to invest your money, you may put it in savings account only or in time deposit. Remember that money in time deposit has higher interest but low liquidity while money on savings account can be withdrawn any time you want it.

If you would like to open a time deposit, you must have a savings account first. One good bank for time deposit in the Philippines is BPI.