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What are features of a fixed deposit account?

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Features of a Fixed Deposit Account.

  • Involves large amounts of money to operate.
  • Are contractual in that maturity is pre-determined e.g. 12 months, 3 years etc.
  • No mid-term withdrawals or additional deposits are allowed.
  • Banks can lend (trade with) the entire amount of fixed deposits with certainty within the contract period.
  • Fixed deposits earn fairly good interest, compared with savings deposits.
  • An account holder who breaches the contract loses his interest and is penalized.
  • Fixed deposits can be used as security for other forms of credit such as overdrafts.
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