What it is:
How it works (Example):
Time deposits generally refer to savings accounts or certificates of , and banks and financial institutions usually require 30 days notice for withdrawal of these .
Why it Matters:
Individuals and companies often consider time deposits as, or readily available , even though they are technically not payable on demand. The notice requirement also means that banks may assess a penalty for withdrawal before a specified date.
Time deposits may pay higher interest rates than demand such as checking or accounts, which allow withdrawals at any time. The Federal Reserve currently does not place reserve requirements on savings and CDs.
Timebelow $100,000 are included in the Federal Reserve's M2 supply measure, and time above $100,000 are included in the M3 supply.