When it comes to managing your finances, a savings account is a great start. However, to make the most out of your hard-earned money, you may want to consider opening a time deposit account. This type of investment locks your deposit for a set amount of time, but offers relatively higher interest rates compared to regular savings accounts.
In this article, CashLoanPH will take a closer look at time deposit accounts in the Philippines including how they work, the pros and cons, the top time deposit accounts available, and things to consider before opening one.
What is a Time Deposit Account?
A time deposit account is a type of investment where your deposit is locked in for a set amount of time. Compared to a regular savings account, time deposits offer relatively higher interest rates and are considered virtually risk-free investments. Amounts of up to P500,000 are insured by the Philippine Deposit Insurance Corporation, making this type of investment a safe choice for many.
How Time Deposit Works
To open a time deposit account, you will need to make an initial deposit, or minimum placement, which can be as low as P1,000 and as high as P50,000 depending on the bank you choose. You can choose your lock-in period, which is the length of time the deposit remains with the bank. Most financial institutions set a minimum lock-in period of 30 days, and a maximum of 5 years and 1 day. Interest rates vary depending on the bank, initial deposit, and lock-in period. The longer the lock-in period and the higher the initial deposit, the higher the returns are on the deposit.
Pros & Cons of Having a Time Deposit Account
- Higher interest rates compared to regular savings accounts
- Flexible maturity period
- Limited risk due to PDIC coverage
- Ensures savings as money is locked away
- Fees will be charged when you pre-terminate the time deposit
- If pre-termination occurs during the first half of the lock-in period, interest will only be 75% of what you would’ve earned
- If pre-termination occurs during the second half of the lock-in period, interest will go down further to 50%
- Documentary stamp tax will be charged in addition to withholding tax
- Sacrificing financial flexibility
Top Time Deposit Accounts in the Philippines
If you have decided that a time deposit account is the best fit for your personal financial structure, below is a list of the top time deposit accounts in the Philippines.
|Bank||Interest Rate||Minimum Initial Deposit||Terms||Rollover Income|
|Tonik Bank||4.50% to 6% p.a.||P5,000||6 months, 9 months, 12 months, 18 months, 24 months||P107,891.09 to P135,672.64|
|Security Bank||4%||P100,000||30, 60, 90, 180, 360 days, 2-5 years, and 7 years||P104,000|
|PBCOM||3.50% (for an initial deposit of P100,000)||P1,000||30, 60, 90, 120, 180, and 360 days||P102,125|
|EastWest Bank||3.125% (for an initial deposit of P100,000)||P10,000||30, 60, 90, 180, 360 days, and up to 5 years||P101,563.47|
|RCBC||2.5% (for an initial deposit of P100,000)||P5,000||30, 60, 90, 180, 360 days, and up to 5 years||P100,625|
|Maybank Philippines||1.75% (for an initial deposit of P50,000)||P50,000||1 and 2 years||P101,802.39 to P104,150.94|
|PSBank||1.50% (for an initial deposit of P50,000)||P10,000||30, 60, 90 days, and 1 year to 3 years||P101,267.42|
|BPI Direct / Family Savings Bank||1.125% (for an initial deposit of P50,000)||P50,000||35, 65, 91, 182 days, and 364 days||P100,940.63|
|China Bank||1.075% (for an initial deposit of P100,000)||P5,000||90, 180, and 360 days||P100,614.10|
|Metrobank||0.875% (for an initial deposit of P50,000)||P10,000||30 days, 2-3 months, 180 days, and 1 year||P100,437.50|
|Unionbank||0.875% (for an initial deposit of P50,000)||P50,000||30, 60, 90, 180 days, 1 year and above||P100,437.50|
|UCPB||0.75% (for an initial deposit of P100,000)||P10,000||90, 180, and 360 days||P100,190.84|
|BDO||0.75% (1-year term)||P1,000||30, 60, 90, 180, 360 days||P100,187.50|
#1. Tonik Bank
Tonik Bank offers some of the highest interest rates in the market, with rates ranging from 4.50% to 6.00% per annum. With a minimum initial deposit of only P5,000, Tonik Bank is a great choice for those who want to access their money during emergencies. Even early withdrawals after 5 days earn 1% interest subject to 20% withholding tax, making it a flexible and accessible investment.
#2. Security Bank
Security Bank’s Peso Time Deposit offers competitive interest rates and exempts accounts with terms of 5 years or more from paying taxes. However, its initial deposit requirement is higher than most banks on this list, set at P100,000.
PBCOM offers a 3.50% interest rate for an initial deposit of P100,000, with two types of peso time deposit accounts available for investors. Their Regular account requires only a minimum initial deposit of P1,000 while their Passbook account has a higher minimum deposit of P50,000, but offers a passbook as proof of account ownership.
#4. EastWest Bank
EastWest Bank offers a 3.125% interest rate for an initial deposit of P100,000, but what sets them apart is their convenient online enrollment process for time deposit accounts. Accomplishing an online form is enough to start the process, and supporting documents can be submitted later at the nearest branch.
RCBC’s interest rate starts at 2.5% for an initial deposit of P100,000, with a minimum deposit of P5,000 earning only 1.625% interest.
#6. Maybank Philippines
Maybank’s ADDvantage Flex Time Deposit offers tiered rates starting at 1.75% for a 1-year term and 2.125% for a 2-year term. The interest rate may increase or decrease during the placement period but will never be lower than the rate initially given.
PSBank offers a 1.50% interest rate for an initial deposit of P50,000, with terms ranging from 30 days to 3 years.
#8. BPI Direct/Family Savings Bank
BPI Direct and Family Savings Bank offer two products: Peso Auto Renew and Peso Express Tie Deposit. The Peso Auto Renew offers accounts that renew placement for a fixed yield automatically, while the Peso Express Time Deposit is ideal for short-term investments, with terms as short as 30 days. Interest rates start at 1.125% for the minimum initial deposit of P50,000.
#9. China Bank
China Bank offers an interest rate of 1.075% for an initial deposit of P100,000. However, should you choose the minimum initial deposit of P5,000, you’ll only earn 0.950% annually.
Metrobank offers an interest rate of 0.875% for an initial deposit of P50,000, with terms ranging from 30 days to 1 year.
Unionbank offers an interest rate of 0.875% for an initial deposit of P50,000, with terms ranging from 30 days to 1 year and above.
UCPB offers an interest rate of 0.75% for an initial deposit of P100,000, with terms ranging from 90 days to 360 days.
At BDO, you can open a time deposit account for as little as Php1,000, with interest rates starting at 0.75% for a 1-year term.
Note: The interest rates and terms mentioned in the sources are subject to change, so it is always recommended to check with the bank for the most updated information. Additionally, it is important to note that time deposits may be subject to taxes and stamp duties as per Philippine law, so it is important to be aware of these charges as well.
How to Open a Time Deposit Account in the Philippines
If you decide to open a time deposit account, the process is straightforward. Just prepare the minimum required deposit, a valid ID, and visit the bank branch of your choice. Discuss the savings features, complete the required form, submit photocopies of your valid IDs, hand over the minimum required deposit, and get your Certificate of Deposit (CD).
Opening a Time Deposit Account Online
Opening a time deposit account online is a simple and convenient process. Here are the general steps to follow:
- Step 1: Visit your chosen bank’s official website and click on the time deposit option.
- Step 2: The page will provide you with all the details about that bank’s time deposit product: features, requirements, fees, and charges, etc.,
- Step 3: Download the application form then complete all the required fields. Print the form and submit to your bank’s nearest branch along with the requirements.
Things to Consider Before Opening a Time Deposit Account
Before opening a time deposit account, there are several things you need to consider. These factors will help you make an informed decision that will benefit you in the long run.
One of the most significant factors to consider is the interest rate offered by the bank. The higher the interest rate, the better your returns. Some banks offer higher interest rates for longer terms, so choose a time deposit account that will give you the best return on your investment.
Minimum Deposit Required to Earn Interest
Most banks have a minimum deposit required to earn interest on a time deposit account. Some banks require a higher minimum initial deposit than others, so if you have a small amount to start with, look for banks that offer a lower minimum placement fee.
Fees and Charges
Some banks charge fees and penalties for early termination or withdrawal of funds. Try to look for time deposit accounts that are not too strict in terms of penalties and charges. A lower termination penalty serves you better.
You’ll have several options regarding how long you’d like to keep your money in a time deposit account. Choices range from 1 month up to a year or up to several years (5 years max). Generally speaking, the longer you keep your money in the bank, the better the corresponding interest rate and bigger gains due to the longer compounding.
Other Banking Features
Besides interest rates, other features such as better execution of online features, easy linkability to mobile payments, availability of a mobile app, better customer support, and others, can influence our decision. Pick one that provides the most, if not all, of the features that you will end up using often.
Now that you know the factors to consider when opening a time deposit account online, you can make informed decisions that will benefit you in the long run. Remember to do your research, compare different banks and choose the one that meets your needs and preferences the most.