Term Deposit Receipts (TDRs) are financial instruments offered by banks to customers seeking a fixed return on their investments. Essentially, a TDR is a certificate issued by a financial institution, confirming a deposit for a specific period at a predetermined interest rate.
What is a term deposit and how it works
A term deposit is a fixed investment where an individual deposits a specific amount for a set duration, typically ranging from one month to five years. The interest rate is fixed for the entire term, offering safety from market volatility and predictable returns.
Funds are accessible at the end of the tenure, though premature withdrawals may attract penalties, including reduced or forfeited interest. Interest payouts can be scheduled monthly, quarterly, yearly, or as specified in the plan. Term deposits are available through banks, credit unions, and NBFCs, making them a reliable option for conservative investors.
Essentially, fixed deposit (FD) are a specific type of term deposit. They share the same core features of safety, fixed interest rates, and a set tenure. The terms might be used interchangeably depending on the country and institution.
To book a term deposit, you can either physically visit a financial institution, or book a deposit from their website or portal. When you book a term deposit, the financial institution provides you with an acknowledgement which is the term deposit receipt, with all the important details of the investment like the interest rate and tenure.