When people open a new savings account they generally tend to be of the low-interest variety, offered by a local bank. They’re not really meant to be an investment strategy – they’re simply a separate place to put our money so we hopefully won’t touch it. These kinds of savings accounts are open-ended, and because they offer interest rates on the lower side of the spectrum they’re easy to open and easy to close. There are other kinds of savings accounts, however, that are defined by deposit terms limits. This means that you cannot access your money until a certain set date has been reached. In almost all cases a savings account with a deposit term limit is one which offers a high interest rate in exchange for no activity on the account.
Understanding Deposit Term Limits
A deposit term limit on a savings account means that there is a “maturity” date attached to the account. If, for example, you put your money into a savings account with a term deposit limit of two years, it means that you can’t make any withdrawals on the money for those two years. After two years, your account has reached maturity. Savings accounts with deposit term limits are considered a very safe way to make money on your money, and they are offered with a number of maturity dates, ranging upwards from one month. Again, however, a typical savings account opened at your local bank will simply be a safe, “low maintenance” place to park your money for a while and go towards your long-term goals or simply to pay for emergencies should they arise. At the same time you’re socking away your earnings you are also able to access them for whatever and whenever you need.
If you decide to open a savings account with deposit term limits, be sure to go over the offer in great detail with your financial advisor or a bank representative. When it comes to where you keep your money you can never have too much information.