Getting to Know Deposits: Definition, Types, Advantages and Disadvantages

If you want to save for the long term, there's nothing wrong lho try deposit. Then, what the heck, that deposit? Come on, see the following information about deposits!

Definition of Deposit

So, time deposit is one of the products offered by the bank to its customers, where the customer will deposit their money with a certain amount then the money is withdrawn according to a predetermined period of time. Thus, the money that has been deposited cannot be withdrawn before the time period. Generally, deposits mature within 3, 6, 12 months or more.

Deposit Type

1. Time deposit

Time deposits are the most commonly used. Time deposit is a type of time deposit that has been agreed upon by the customer. Starting from 3 months to more. So, withdrawals can only be made at certain times. Deposits can be made by individuals or institutions. Well, the interest rate given by the bank is higher than ordinary savings.

2. Certificate of Deposit

Certificate of deposit is a type of deposit that is not attached to the name of a particular individual or institution because later it can be transferred or traded to other parties. Customers have the choice of a 3, 6 or 12 month deposit with a certificate. Advance payments can be made monthly or at maturity.

3. On-Call Deposit

Finally, on-call deposits are short-term deposits with a minimum period of one week and a maximum of one month. On-demand deposits are usually issued in fairly large amounts. You can receive interest when your deposit is successfully withdrawn, but you need to first confirm with the bank that you want to withdraw your balance.

Deposit Advantage

1. Guaranteed safety

Time deposits have a lower level of risk than other forms of investment such as the stock and bond markets. Deposits are different from stocks which have a high risk of loss. So, it can be ascertained that the deposit is safe to use without the need to think about risk. Moreover, the security is guaranteed by the Deposit Insurance Corporation (LPS), making you calmer in saving large amounts of money.

2. More profitable

With a low risk of failure, time deposits also offer higher interest rates than other banking products. So, the more money you save, the more interest you can earn.

3. Flexible

You can choose the time period according to your own ability. You can use deposit products to save money in the bank in the long term. However, deposit disbursement cannot be done at will, it must adjust to the agreed tempo.

Weakness of Deposit

1. Low Profit

Even though there is minimal risk like stocks, the profits from deposits are relatively low. Given, the profit from interest will be deducted for tax and administrative costs.

2. Customers Need to Pay Taxes and Penalty Fees

Deposit user customers are not charged a savings administration fee, but customers are charged income tax expense (PPh). In addition, if the customer withdraws funds before maturity, the customer will be charged a penalty fee.

3. Withdraw Money Only Certain Time

This type of product is not right if you want to save for emergency money. Because, the withdrawal of the money can only be done after the due date.

Well, here's information about deposits. If you are interested, please register as a deposit customer, OK!