1) Bank deposits, definitions:
2) Who can offer bank deposits?
4) Deposits at sight:
5) Fixed term:
6) Term and fixed rate bank deposits:
7) Deposits combined with investment funds:
8) Deposits related to other products and services:
9) Benefits of the bank deposits:
10) Related video:
11) External links:
The bank deposits are accounts or securities in which the clients bring money in so that the financial entities guard it, they can offer related services and they are given returns over the capital, depending on the amount, the balance and its maintenance over the time. The bank deposits may be at sight or term; in the first case the money put into the bank can be withdrawn at the client’s needs, whereas the term bank deposits obliges the client to keep the money until its expiration time, unless a penalty is paid for the withdrawal before the time or its cancellation.
Any financial entity ruled and watched by the bank superintendence is authorized to collect money from the public through financial instruments such as the bank deposits. In this case the deposits can be open in the banks, the saving accounts, commercial financing institutions, financial cooperatives and trusts, among others.
There are two big groups or types of bank deposits: those called at sight because of its immediate money availability and the term bank deposits in which the money must be kept until the agreed expiration date. Within the deposits at sight they are the savings and the current accounts; and in the term deposits they can be varied and diverse according to its fixed term, the amount and the interest type, the way of obtaining it, a fixed or varied interest, the minimum amount of capital to open it and the maximum allowed, as well as the relation of the deposit with the other products and financial services.
The bank deposits at sight, either through a saving account or a current account, allows the withdrawal and free will in the bank deposit to which you can freely access and without restrictions when you wish through a saving book, check book, debit card, automatic cashier, payment order or transference, telephone authorization or by internet, automatic debit and list consignation, among others. The main difference between the saving account and the current account is the interest rate to pay which is generally higher in the first deposits or of savings as well as the possibility of drafting or be in red in the case of the current account.
The term bank deposits are of two types principally: those of term and fixed rate and those combined in which one part of the capital is invested in term and fixed rate deposit, whereas the other part of the money goes to investment funds in which the term is fixed but the interest is variable. A third alternative of the term deposits is that it is related to other services of financial entities to improve the investment return, which increases as long as the client is connected with a pension plan or insurance, or it has a payment service of the list of workforce, or it has credit card, among others.
They are generally for at least one year or twelve months, they offer the lowest interest rate but as compensation the revenue and the complete capital payoff are guaranteed with the bank deposit. They are recommended for the traditional and conservative investors.
These bank deposits allow you to select the amount of capital that you wish to invest in one or another alternative, for example: 70% to term and fixed rate, and the rest 30 % in investment funds. Other usual proportions: 50 – 50% or 30 – 70% or 25 – 75%. Logically, the more you invest in the stock funds, the more expectation of getting greater interests you have, but with a higher risk. Some banks and savings accounts limit this risk, guarantying the exact capital payoff and even guarantying the minimum return for all the agreed period, which may be for 12 or 18 months. These are excellent alternatives for modern and risky investors.
The banks and saving accounts get better utilities when the same client uses many of their products and services simultaneously, that’s why there are bank deposits related to other products and services in which loyalty is rewarded with additional points of interest rate, for instance, if a client has a bank deposit as well as a current account some points of 0,4% to the ordinary interest can be added, and the same with other products such as credit cards, pension funds and many others.
For the banks, the deposits represent a collection of stable and increasing resources to allow the development of its intermediation business like the collocation or loans to clients who need it, and within its process getting utility margin. For the investors and savers, these deposits are one very good option to obtain safe returns, as well as its custody and easy access by payment means and electronic systems. The competence between financial entities is so big to get the favorable of the bank deposits that they even offer electronic appliances and stuff prizes to complement the offered interest.