Advantages Of Short Term Deposits
Short term deposits are term deposits that allow you to put your money in higher interest investment options for a short duration. There are various advantages of short term deposits that not everyone is aware of. Some of these have been listed below.
- Short term deposits are convenient because they do not require you to lock in your funds for the long term. These term deposits generally have tenure of a few months to a couple of years. The customer can generally choose the exact term that he is most comfortable with based on various options provided by the bank.
- Short term deposits offer a relatively higher rate of interest and therefore are better than leaving money in the savings account, where you receive a relatively lesser amount.
- In fact short term deposits are the perfect blend of high interest rates without the necessity of blocking money for a long period of time.
While the above mentioned advantages are adequate enough to make you want to choose one, there is a relationship between the length of the lock in period or the tenure and the rate of interest that is offered. In most cases, the higher the tenure, the higher the interest is likely to be in short term deposits.
Short term deposits still have one limitation. They do lock in the funds for the tenure that you have chosen and therefore do not offer you the kind of flexibility that a savings account does. But then a savings account does not give you comparable interest rates as well.
Mel writes about short term deposits among other finance related topics.
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