Types of Saving Products Offered By A Bank

The different saving products that a bank offers could be classified into two categories: (1) products without a fixed maturity period, and (2) products that have a fixed maturity period.

Savings account and Current account are of the first variety, i.e. they don’t have a maturity period. You can deposit money in the account any time and you can withdraw money from your account any time, without any penalty.

Till some years ago, a savings account gave interest, while current account did not. Nowadays, most banks give interest on current account; so the difference, for all practical purpose, between a saving account and a current account has become negligible. Different banks call their essential current account product with different names like call account, call deposit, current account, etc.

Time deposit (TD) and Certificate of Deposit (CD) are of the second variety. They have a fixed maturity period (aka tenor), which means that you cannot withdraw money any time.

If the bank allows early redemption (i.e. withdrawal) they will generally levy early withdrawal penalty. Practically, the key difference between a TD and a CD is their maturity period. In Egypt, CD maturity is minimum three years, while TD maturity could range from one week to a few years.

Because of their longer maturity period (i.e. lock-in period) CDs typically offer higher interest rate than a TD. Due to the easy liquidity feature, the savings account offers lower interest vis-à-vis a TD or CD.

In crux, with deposits in a bank, you are likely to earn the highest interest in a CD, followed by a TD and lastly the Savings / Current Account.