2 Things You Need to know About Time Deposit

Time Deposit

There are a few things you should know about time deposits. This article explains them for you.

Time deposit can be a great way to earn a decent return on a bank deposit. Instead of the usual savings account which earns 1% or less in annual interest, you are more likely to earn better returns from time deposits, especially if they are left in the bank for the long term.

We discuss some of the common features of Time Deposit products in the Philippines

Frequency of Interest Payment

Interest rate in the Philippines for time deposit differs from bank to bank but remains fairly similar and competitive across banks. Interest is paid upon the maturity of the time deposit. Time deposit maturity ranges anywhere between 30 days to 5 years, each with a different interest rate. The longer the time to maturity, the more banks will pay out in terms of interest.

For example:

  • Quarterly payment – interest is paid shortly after every three months.
  • Semi quarterly payment – interest is paid every 2 months.
  • Semi annual annual – interest is paid every six months.
  • Annual payment – interest is paid yearly.

Auto Renewal Time Deposit

Philippine banks has provisions to automatically renew your investment. If you have invested for a time deposit for a fixed period of one year, once it reaches that maturity the bank will automatically reinvest it. The interest rate follows that of the updated interest table at the bank so you need to get in touch with your bank to find out if there was a change in rate.

The Bank of the Philippine Islands (BPI) for example offers Auto Renew feature for multi-currency deposit like the Australian Dollar (AUD), British Pound (GBP), Canadian Dollar (CAD), Japanese Yen (JPY), Swiss Franc (CHF), and Euro (EUR). Talk to your bank if you want to opt out of auto renewal from your time deposit.

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