Term deposits include short-term and long-term savings, so what are the benefits of long-term savings?
What is long term savings?
Savings is a safe and popular form of investment chosen by many people. Savings include term savings and non-term savings.
In which, term deposit is a form of savings for a certain period of time and this period of time is agreed upon by the depositor with the bank right from the time of opening the account.
Long-term savings are savings from 3 months or more such as 12 months, 18 months, 24 months, 36 months, 60 months... Long-term savings are highly appreciated by experts for their safe, stable and effective investment.
The benefits of long-term savings
Long-term savings have many advantages such as:
- Safety : When making long-term savings deposits, the bank will guarantee the safety of the deposit for a certain period of time.
- Attractive interest rates: The biggest advantage of long-term savings is the attractive interest rate, higher than short-term savings. Thanks to that, depositors receive high profits from idle money.
- Increase financial management efficiency: By saving money for a long time, customers can limit uncontrolled spending. In addition, customers can also reserve a certain amount of money for investment, building a house, buying high-value items or preventing illness...
- Low risk: When making long-term savings, customers will receive a fixed interest rate. Therefore, this deposit is not subject to financial fluctuations for a certain period of time.
What is a reasonable term deposit?
To determine which term deposit is appropriate, customers need to base it on their needs and expected time of using their money.
- If you need to use money regularly in the next 3-6 months, a 2-3 month savings term is the most suitable. Currently, the savings interest rates at banks for 2-3 month terms are usually the same. After maturity, the depositor will receive the principal and interest to use, and at the same time, the right to decide whether to continue depositing money or not.
- If you do not need to use your idle money for 6-7 months, a 6-month term is suitable. The interest rate for a 6-month term is usually higher than that for a 1-3 month term.
- If you do not need to use your idle money in the next year, you should choose a 12-month (ie 1 year) savings term. This is an ideal interest rate, many banks apply preferential policies with additional interest rates to encourage users to save.
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