Time deposit accounts include both short-term and long-term savings, so what are the benefits of long-term savings accounts?
What is long-term savings?
Saving money in a bank account is a safe and popular investment option chosen by many people. Savings accounts include fixed-term savings accounts and non-fixed-term savings accounts.
In this context, term deposit is a form of savings where you deposit money for a specific period, and this period is agreed upon between the depositor and the bank when opening the account.
Long-term savings accounts are a form of saving for 3 months or more, such as 12 months, 18 months, 24 months, 36 months, 60 months, etc. Long-term savings accounts are highly valued by experts for their safe, stable, and effective investment potential.
The benefits of long-term savings.
Long-term savings accounts offer many advantages, such as:
But Security : When depositing money into a long-term savings account, the deposit amount will be guaranteed safe by the bank for a specified period.
But Attractive interest rates: The biggest advantage of long-term savings accounts is the attractive interest rate, which is higher than short-term savings accounts. As a result, depositors receive a high return on their idle money.
But Improve financial management efficiency: By depositing savings for a long period, customers can limit impulsive spending. Furthermore, they can accumulate a certain amount of money for investment, building a house, purchasing high-value items, or preparing for illness, etc.
But Low risk: When depositing money into a long-term savings account, customers receive a fixed interest rate. Therefore, this deposit is not subject to financial fluctuations for a certain period of time.
What is a reasonable term for a savings account?
To determine which term deposit is most suitable, customers need to base their decision on their needs and the expected timeframe for using the funds.
- If you need to use your money regularly within the next 3-6 months, a 2-3 month deposit term is most suitable. Currently, interest rates at banks for 2-3 month terms are generally the same. After maturity, depositors will receive their principal and interest back, and have the right to decide whether or not to continue depositing money.
- If you don't need to use your idle funds for 6-7 months, a 6-month term is suitable. The interest rate for a 6-month term is usually higher than for terms of 1-3 months.
- If you don't need to use your idle funds in the next year, you should choose a 12-month (i.e., 1 year) savings deposit term. This is an ideal interest rate, and many banks offer preferential policies with additional interest to encourage users to deposit savings.
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