Interest-bearing products like savings accounts, retirement funds, money market funds, and some forms of bonds allow money to grow steadily without exposing account holders to unreasonable risk. However, the banks and other entities that issue these products do have to mitigate their own risks, which is why most interest-bearing products often have a long maturity or relatively low interest rates. Such arrangements have long been true at traditional banks, but thanks to new digital banks like Maya Bank, things are shifting in favor of consumers.
This shift has become increasingly clear in consumer banking products like time deposits. Earning through time deposit interest has long been a popular means for maximizing extra funds, but traditional time deposits do have some drawbacks in today’s fast-paced financial environments. Understanding how time deposit works and how new digital banking products are changing things can help you decide whether this type of account fits your broader financial goals.
1. A Regular Time Deposit Requires You to Keep Funds Untouched for a Fixed Period
A time deposit allows you to place money in an account for a specific period, commonly called the term or tenor. During this period, the bank holds your funds while paying you pre-agreed interest rates. Unlike regular savings accounts, withdrawals are restricted until maturity. Early withdrawals, when allowed, tend to come with severe penalties, which strongly disincentivize impulsive withdrawal. Also, many traditional time deposits generally do not allow you to add funds, which could impact your money’s growth potential, especially if you experience a windfall that could have boosted your earnings before the tenor is over.
Newer time deposit offerings are moving away from this model, giving depositors more flexibility. Maya Time Deposit Plus, for example, allows cash-ins at any time, making it the perfect way to maximize the potential of your extra funds. You can create up to 5 different Maya Time Deposit Plus accounts to better segregate your long-term goals, with each having your choice of either a 3-month tenor at 5.0% p.a, 6-month tenor at 6.0% p.a, or a 12-month tenor at 5.5% p.a.
2. Interest Rates Can Vary Depending on the Product and Tenor
Financial advisors may advise risk-averse individuals to open a time deposit account of a bank that offers good interest rates. However, things can get confusing fast, as different banks may offer varying rates depending on the deposit amount, promotional offers, and chosen term length.
Generally speaking, however, digital banks like Maya offer the highest interest rate time deposit Philippines’ consumers can access. These should be your first picks if you want to maximize your wealth-building potential.
If you’re going with a digital bank, why not pick one with a proven track record? Thanks to its history of innovative, consumer-focused offerings, Maya Bank has become the #1 digital bank in the Philippines, making it an excellent pick for time deposits and other banking products that help you grow your wealth. It’s a safe bet, too, considering that it’s a Bangko Sentral ng Pilipinas-supervised financial institution (BSFI), one of just six Philippine banks to have earned that critical distinction.
3. The Computation of Earnings Depends on Your Rate and Term
The computation of time deposit earnings is critical when you start comparing products. Banks typically calculate earnings using an annual percentage rate distributed across the chosen term, so the final amount you receive depends on your deposit amount, applicable taxes, maturity period, and critically, the product’s specific terms. In many cases, banks reward longer commitment periods with higher interest returns because the funds stay with them for an extended time.
Time deposit rates matter because with long-term interest-bearing instruments, even small discrepancies can lead to widely different outcomes due to compounding interest. For a better idea of future returns on specific time deposits, you can use a time deposit calculator. Read this article to learn how to create accurate earnings estimates.
4. Early Withdrawals May Affect Your Earnings
As mentioned earlier, most time deposit products implement a penalty for withdrawals made before the fund’s maturity. This measure is intended to protect the bank and give it some assurance of access to funds, but it also serves to enforce depositors’ savings discipline. That said, this penalty can be inconvenient if you need funds in your time deposit account for emergencies.
Thankfully, leading digital savings products like Maya Savings can complement long-term time deposits by offering 24/7 fund flexibility alongside competitive interest rates. Maya users can also boost their Maya Savings base interest rate of 3% p.a. up to 15% p.a. by using Maya services for daily transactions, like buying load, paying bills, using Maya Easy Credit, paying via QR Ph, using your Maya Card, or paying with Maya online. This makes Maya Savings an excellent vehicle for both interest-earning emergency funds and everyday spending.
5. It’s Easier to Monitor Your Time Deposit Account and Cash Out Your Earnings through a Digital Banking Platform
For years, maintaining a time deposit Philippines account at a traditional bank offered a straightforward, low-risk way to protect funds allocated for longer-term goals. However, opening accounts and withdrawing mature funds often entailed in-person visits, which isn’t necessarily so easy in these fast-paced times.
Digital banking has changed this experience for the better by allowing customers to open and manage all their banking accounts directly through mobile apps. Digital platforms like the Maya app also allow users to monitor maturity dates, transfer funds, and explore other savings products more easily within one ecosystem.
Speaking of other savings products, if you’re saving up for something specific, why not try Maya Personal Goals? This offering is specifically designed to boost interest rates the more you add to a fund, without impacting your ability to move your money. You can create up to five Maya Personal Goals, each with a base interest rate of 4% p.a. This rate can be boosted up to 8% p.a. as more funds are added, with goals containing a balance of up to PHP 100,000 earning interest under tiered rates. Using these products alongside a time deposit lets you maintain a good degree of flexibility, even as you maximize your interest earnings.
Make Maya Time Deposit Plus a Part of Your Financial Mix
Time deposits continue to offer a practical way to grow savings steadily for the long term without the risks inherent in typical investments. With Maya Time Deposit Plus, you can set aside and top up funds for a fixed term and still keep the rest of your money accessible through Maya Savings and Maya Personal Goals.
If you want a more balanced approach to growing your money, consider making Maya Time Deposit Plus part of your broader financial planning. Download the latest version of the Maya app today to open your first Maya Time Deposit Plus accounts.