It is a deposit held at a financial institution that has a fixed term. It is generally for a short-term, with maturity periods ranging anywhere from a month to a few years. When a term deposit is purchased, the lender (the customer) understands that the money can only be withdrawn after the term has ended or by giving a predetermined number of daysâ€™ notice.
Term deposits are an extremely safe investment option and are therefore very appealing to conservative, low-risk preferring investors. By having the money tied up, customers generally get a higher rate with a term deposit when compared to a demand deposit.