Do you like saving? Then saving in a deposit can be the best solution for you. A deposit is a type of savings product that banks offer to customers besides savings. Usually, this investment instrument is favored by investors with a low risk profile.
Although both function as safe money storage places, deposits differ from savings. Banks offer deposits as investment products that have a higher purchase rate than banking. However, customers cannot withdraw funds from their deposits within a certain period of time.
In this article, we will discuss further about bank deposits, starting from the definition, types, to the benefits of using deposits.
Key Takeaways:- Deposits are a type of savings product that banks offer to customers besides savings.
- According to the Financial Services Authority (OJK), deposits are savings whose withdrawal can only be made at a certain period of time and certain conditions.
- Usually, to invest with deposits, a person must have a new account and deposit a certain amount of money.
Definition of Bank Deposits
According to the Financial Services Authority (OJK), deposits are savings whose withdrawal can only be made at a certain period of time and certain conditions. Bank deposits are money placed in banking institutions to secure money.
This deposit is made into savings accounts such as savings accounts, checking accounts, and money market accounts at financial institutions. The account holder has the right to withdraw the stored funds, in accordance with the terms and conditions governing the account agreement.
Usually, to invest with deposits, a person must have a new account and deposit a certain amount of money. Each institution generally has a minimum deposit that must be met by the depositor when making the initial deposit.
Bank deposits have the following characteristics.
- Deposits can be withdrawn after the period ends
- Deposits that are due can be automatically extended or automatic roll over (ARO)
- Deposits can be stored in rupiah currency or in foreign currency.
How Deposits Work
Bank deposits work through an agreement and regulation system. When a customer makes a deposit deposit at a bank, the bank agrees to hold that money for the customer. The bank sets guidelines for the deposit amount and time limit.
When storing your deposit, those funds become the bank's assets. This means the bank can use those funds while they hold the assets. For example, they use the funds to pay other customers' withdrawals.
The customer's deposit account is part of the bank's liabilities. This means the bank is responsible for the funds in the customer's account. On a certain date, they must be able to return the funds and pay interest.
Depending on the bank or financial institution, customers can deposit funds in several ways, including:
- Directly – Customers can visit a bank branch and deposit cash or checks directly into their deposits.
- Through ATM – For some types of accounts, customers can deposit funds through an ATM.
- Through mail – Some banks accept paper checks via mail which they will then deposit from the check into the customer's account.
- Electronically – Customers can deposit funds online, including direct deposits and electronic payments.
When a customer withdraws part or all of their funds, the bank may pay interest depending on the type of account. The bank can set different interest rates for different types of deposit accounts. Generally, deposits with higher interest require a larger initial deposit.
Types of Bank Deposits
There are several types of bank deposits, namely:
Time Deposits
Time deposits are a type of deposit whose funds can be withdrawn based on a certain period. Generally, fund withdrawals can be made within periods starting from 1, 3, 6, and 12 up to 24 months. However, if customers withdraw deposits before the due date, a penalty will be charged.
Time deposits are issued by listing the name of the deposit owner which can be an individual or an institution. The interest rate and payment time are determined based on each bank's provisions. Usually, deposit interest can be paid monthly or after maturity according to the specified period. This payment can be made in cash and non-cash.
The amount of funds deposited for time deposit savings is usually in round amounts, such as Rp 1,000,000, Rp 2,000,000, or Rp 2,500,000. This amount of funds usually has a minimum money limit to be saved.
Certificate of Deposit
Similar to time deposits, certificate of deposit is a savings issued with periods of 1, 3, 6, and 12 months. Certificate of deposit refers to savings in the form of deposits where the certificate as proof of storage can be transferred. Issued in the form of a certificate, this deposit can be traded and transferred to other parties.
Certificate of deposit interest is calculated by discount method, which is calculated by subtracting the deposit nominal with the amount of money deposited.
Compared to other types of deposits, certificate of deposit has interest withdrawals that can be made at the beginning, either in cash or non-cash. The issuance value of certificate of deposit is already printed in various nominals which are usually in round amounts, so customers can buy in sheets with varying nominals, according to what they want.
Giro Account (On-Demand Deposit Account)
Also known as on-demand deposit account, giro account is a basic checking account. Consumers deposit money and the deposited money can be withdrawn at the account holder's discretion. This account often allows the account holder to withdraw funds using a bank card, checks, or over-the-counter withdrawal slips.
In some cases, banks charge monthly fees for giro accounts, but they can waive the fees if the account holder meets other requirements, for example setting up direct deposits or making a certain number of monthly transfers to savings accounts.
Savings Accounts
Savings accounts offer interest to account holders on their deposits. However, in some cases, account holders may be charged monthly fees if they do not maintain a certain balance or certain deposit amount. Although savings accounts are not linked to checks or cards like giro accounts, their funds are relatively easy to access by account holders.
Conversely, money market accounts offer slightly higher interest rates compared to savings accounts, but account holders face more restrictions on the number of checks or transfers they can make from money market accounts.
Call Deposit Accounts
Call deposit accounts are often referred to by institutions as interest-bearing checking accounts, Check Plus, or Profit Accounts. This type of deposit savings combines features from checking accounts and savings accounts, allowing consumers to easily access their money but also earn interest on their deposits.
What Are the Benefits of Deposits?
Investing with deposits can bring many benefits to customers, the following are some of them.
Saving Safely
Deposits allow you to save money more safely in money storage institutions or banks. Deposit storage is guaranteed by the Deposit Insurance Corporation (LPS) with a guarantee up to 2 billion.
In addition, the value of the money you deposit will also not be affected by market movements or fluctuations. This can reduce risk, but also reduce potential profits.
More Profitable Interest Rates
Compared to regular savings, deposits have more beneficial interest. Deposit interest from the money you save will be determined by the bank depending on the specified period, for example quarterly or annually. You don't need to worry about the possibility of deposit interest value becoming negative, because the deposit interest amount is determined from the beginning.
Income Earnings Per Tenor
By saving money in the form of deposits, customers can earn income from each tenor. Tenor is the maturity period that has been agreed upon by the customer with the bank at the beginning of opening the deposit. This way, customers can still gain profits from interest sent to their personal accounts every tenor without needing to liquidate the deposit every time.
Open Deposit Savings with Many Benefits at BTN Prioritas
Now after you know about bank deposits and their benefits, you are ready to save your money in the form of deposits. For those of you who want to open a deposit, BTN Prioritas has the right solution for you.
Introducing Deposito BTN, one of BTN Prioritas' flagship products where you can save your money in the form of deposits to get greater benefits than regular savings. By saving in Deposito BTN, you can get big benefits and attractive interest rates.
There are several deposit products offered by BTN Prioritas, including:
- Deposito BTN Retail Valas – a savings product with fund storage in foreign currency (USD) that can only be done at certain times with attractive interest rates
- Deposito BTN Retail Rupiah – a savings product with investments in rupiah currency with attractive and competitive interest rates, accompanied by high benefits
- e-Deposito di balé by BTN – a deposit savings product that you can open anywhere and anytime through your smartphone, with interest rates
Interested in finding out more about the deposit products offered by BTN Prioritas? Please visit our website to find out more.
