What exactly is a time deposit?

Question

I understand the function of a time deposit. You can make a deposit, and you cannot withdrawal (without a fine) for a set amount of time. Really what I'm confused upon is what types of accounts are considered time deposits.

Investopedia's definition is:

A time deposit is an interest-bearing bank deposit account that has a specified date of maturity, such as a savings account or certificate of deposit (CD).

Sapling's definition starts with:

Time deposits, also known as certificates of deposits, are promissory notes issued by banks.

Then goes on to explain the three types of CD accounts: traditional, liquid, and brokered.

The Investopedia article suggests that a savings account is a type of time deposit, and that there are other types beyond the two listed (but never describes any other examples). The Sapling article suggests that "time deposit" is equivalent to "certificate of deposit", implying a savings account is not a type of time deposit.

Can anyone clarify?

Answer 1

Investopedia's definition is a little more inclusive. The idea is that a time deposit account is one where you need to wait for a certain period of time before you can make a withdrawal.

Standard bank savings accounts, where you can make a withdrawal instantly, are not time deposit accounts, by definition. However, some banks offer a product called notice accounts, where you need to give the bank notice before making a withdrawal (perhaps 30 or 60 days) in exchange for a better interest rate. These are a type of time deposit, as are traditional Certificates of Deposit, where you agree on a specific withdrawal date at the time of deposit.

Answer 2

A savings account with a maturity date, meaning you cannot withdraw the funds (without penalty) before a certain date, is likely what the article is referring to.

A "normal" savings account, where funds can be withdrawn at any time, would not be a type of time deposit account.