Savings is a means for someone to prepare for future needs. Generally they choose certain financial institutions to help. Of course they have various reasons, including the existence of various service facilities offered. In Indonesia, there are many types of savings, including term savings. In order to understand what a term savings is, the following will explain the complete definition of term savings.
The definition of term savings in general is a type of savings that has a certain period of time in saving it. Customers are required to deposit a fixed amount each month within a certain period of time. In addition, customers are also unable to withdraw money from the account until it reaches the agreed period. The specified time period can start from 12 months, 24 months, even more, according to the agreement between the customer and the bank.
For example, a customer wants to follow a time deposit in a bank. The amount of deposit / savings agreed with the bank is Rp. 200,000.00 within a period of 5 years. So, this means that within the next 5 years, the customer is required to deposit / save IDR 200.00.00 per month, and may not take / withdraw money from the account before 5 years.
Term savings are usually chosen by someone to prepare long-term needs, such as children’s education, the cost of building a house, or other needs that cost a lot.
Read also: Mutual Funds Investment Tips
The money invested in a time deposit cannot be taken at will because there are rules for when to withdraw it and even fines are applied if the customer violates the agreement. The customer also has the obligation to deposit a fixed amount each month according to the previous bank agreement. While ordinary / conventional savings, the money that has been saved can be withdrawn at any time, even the bank facilitates ATM (Automated Teller Machines) services for customers, so that it is easier to withdraw money from savings. Customers are free to deposit their money at any time with an amount that is not specified.
However, when viewed in terms of the interest rates earned, time deposits have higher interest rates, namely 3% to 7% per year. Meanwhile, the interest rate on ordinary / conventional savings is only 0% to 2%.
The explanation regarding the definition of term savings is expected to be able to provide an understanding for those of you who are planning to set aside money to meet future needs. This is because a time deposit is an easy type of investment and does not contain a lot of risk. This type of savings is also suitable for those of you who want to discipline yourself in saving.
But before following it, you should consider carefully. Determine the amount and period according to your financial situation. So that it is efficient and not burdensome. In addition, choose a bank that is well-known and trusted to avoid fraud. You can also ask for advice from people around who already fully understand the meaning of term savings.