In the Indian banking system, demand deposit and time deposit are two major categories of bank deposits. They differs in terms of accessibility, interest rates, and purpose. Time deposits are for longer-term investments, whilst demand deposits give priority to liquidity for everyday activities. I have shared more differences with you below.
What is the Difference Between Demand Deposit and Time Deposit?
Here are a few differences between them.
DD | Time Deposit |
Demand Deposits refer to funds held in savings or current accounts that can be withdrawn by the depositor at any time without prior notice. | Time Deposits, also known as fixed deposits (FDs) or recurring deposits (RDs), are held for a fixed tenure, i.e., ranging from 7 days to several years. |
These are primarily used for day-to-day transactions and offer high liquidity. | These deposits cannot be withdrawn before maturity without penalty. |
Demand deposits are considered low-risk and are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC). | Time deposits offer higher interest rates depending on the duration and bank policies. |
The key demand deposit vs time deposit differences lie in liquidity, interest rates, and withdrawal flexibility. Demand deposits are suitable for regular cash needs, while time deposits are better for saving money over a fixed period for higher returns. I hope you found this helpful.
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What is the Difference Between a Demand Deposit and a Time Deposit?
ravi
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2025-05-17T15:35:14+00:00 2025-05-17T15:35:16+00:00Comment
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