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Time deposit is one of the financial services that a bank offers to its clients. It is defined as a “deposit of funds in a savings institution under an agreement stipulating that the funds must be kept on deposit for a stated period of time, or the institution may require a minimum period of notification before a withdrawal is made.”

Rolando Rojas, the former vice president of the Development Bank of the Philippines, says 30 days is the standard holding period for time deposits. But one can opt for a longer term –- such as 60, 90, 180, 270, or 360 days -- at higher rates. As to how long one should hold a time deposit, Rojas says it varies depending on the individual’s needs. If a depositor wants to earn from his time deposit, he must not touch his account if he could help it.

A time deposit account can be opened with as little as P5,000, like in DBP’s case, which is for a 30-day period at 3.75 percent interest annually. This rate is applicable for amounts up to P9,999. The interest rates go up the longer the term is. Four percent interest is offered for terms ranging from 90 days to 179 days, and higher for 180 to 269 days, or 270 to 360 days.

Rojas advises new depositors to start small. They can then increase their savings later on as their knowledge of investing in time deposit accounts increases.

For new time depositors, Rojas recommends the biggest banks in the country, and the world’s top 100 banks for moneyed depositors.

Rojas says a depositor can also consider the top government banks such as DBP and the Land Bank of the Philippines. “There is stability in putting money in DBP because it is backed up by the government of the Philippines,” he says.

Rojas says DBP would usually ask such depositors for details about their status, assets, lifestyle, and other indicators of how they manage their finances, to know if they would benefit from their time deposit. “For instance, if Mr. XYZ has P5 million and wants to put it in a time deposit, the bank will ask about his lifestyle, assets, liabilities and other important details to enable the bank to craft an appropriate package for him,” says Rojas. ”If he has to pay obligations worth P500,000, it would be wiser for him to open a time deposit of P3 million to 4 million and use the P1 million for his other obligations.”

Aside from living on the interest, one can also use the money saved in time deposits to pursue long-held dreams. Juliana Rodriguez, an employee in a government financial institution, says investing in a time deposit has allowed her to pursue her love for travel. “With my dollar account time deposit, I was able to travel to Europe twice,” says Rodriguez.

Rodriguez says she opened a dollar account time deposit around 20 years ago using the dollars sent to her by her relatives abroad. ”I wanted to save my money and make it grow. However, I do not possess the skills needed to become an entrepreneur. And so putting the money in a bank was the best option,” she says.

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