What is a fixed-term deposit?

What is a fixed-term deposit?
A fixed term deposit, also known as FTD, is a financial product through which an individual (natural person) or a company (legal entity) deposits an amount of money in a financial entity during a specific period of time in exchange for remuneration at a previously fixed interest rate. Interest can be paid in full after the term has ended or periodically during the term of the deposit.

It is also important to consider the liquidity, whether there is a penalty if you want to withdraw the money before the end of the set period.

What are the benefits of a fixed-term deposit?

  • Risk-free return: you know the return you will get from your money beforehand.
  • Guaranteed investment: the return and the invested capital are assured and up to 100,000 euros are backed by the Deposits Guarantee Fund in the event that the financial institution does not pay.
  • Fast contracting: the contracting of a fixed-term deposit is a very fast and easy process to arrange.
  • Higher return based on the due date: the further away the due date, the greater your return will be.

What are the downsides of a fixed-term deposit?

  • Reduced return: In the current market situation, the returns offered for these products are less compared to other types of products.
  • Early cancellation: As we already mentioned, although some fixed-term deposits do not charge early cancellation fees, most banks charge a fee for withdrawing the money you deposited early.
  • Fixed capital: When the bank does not allow for an early withdrawal, the customer may not draw down on the capital until the end of the agreed term.


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