Fixed term deposit accounts have consistently been a popular choice for individuals looking to grow their savings in a secure and structured manner. These accounts offer a range of advantages that make them an attractive option for those seeking stability, predictability, and attractive returns on their savings. In this article, we will explore the key advantages, and some of the downsides, of fixed term deposit accounts.
Guaranteed Returns
One of the primary advantages of fixed term deposit accounts is the assurance of guaranteed returns. Unlike investment options that are subject to market fluctuations, fixed term deposits offer a fixed interest rate over a predetermined period. This ensures that savers know exactly how much they will earn at the end of the term, providing a sense of security and predictability. Of course, the fact that interest rates are fixed means that you are not able to benefit from any market upturns or increases in interest rates that might occur while your funds are locked into a fixed term deposit.
Low Risk
Fixed term deposit accounts are considered as a low-risk option when compared to more volatile options like stocks or mutual funds. The principal amount is typically secured by the bank offering the term deposit account and, in the case of MeDirect, as well as other banks licensed by the Malta Financial Services Authority, further protected by the Depositor Compensation Scheme. This scheme guarantees up to €100,000 in deposits held by a depositor with a licensed bank. This, coupled with the fact that the predetermined interest rate ensures a steady income, makes fixed term deposits an excellent choice for risk-averse savers who prioritise capital preservation.
Stability and Predictability
Fixed term deposit accounts provide a stable and predictable environment to save money. With a fixed term and interest rate, investors can plan and manage their finances more effectively. Of course, the fact that these accounts are ‘fixed term’ does mean that you will not have access to your funds for the period during which the account is open but the stability they provide is particularly beneficial for those who require a reliable source of income or want to save for a specific future expense, such as education or a down payment on a home.
Diverse Range of Terms
Fixed term deposit accounts offer flexibility in terms of duration. Savers can choose the length of the deposit term based on their financial goals and liquidity needs. Short-term deposits may be suitable for those who want quick access to their funds while still earning a healthy interest rate. MeDirect, in fact, is currently offering 3.15 per cent per annum on its six-month term deposit. Longer-term deposits on the other hand, can be attractive for those with a more extended time horizon.
Ease of Use
Opening a fixed term deposit account is a straightforward process. If you are already a MeDirect customer all you need to do is access the mobile app or login to our online banking platform, click ‘Open Account’, and follow the instructions. With MeDirect, term deposit accounts can be opened with as little as €100. The simplicity and accessibility of fixed term deposit accounts make them an excellent option for anyone interested in growing their savings.
Fixed term deposit accounts offer a range of advantages that make them an appealing choice for a broad spectrum of savers. From guaranteed returns and low risk to stability, predictability, and ease of use, these accounts provide a secure and structured avenue for individuals looking to grow their savings. While each individual’s financial situation and goals are unique, the advantages of fixed term deposit accounts can make them a valuable component of a diversified financial portfolio.
MeDirect Bank (Malta) plc company registration number C34125, is licensed to undertake the business of banking in terms of the Banking Act (Cap. 371). The Bank is a participant in the Depositor Compensation Scheme established under the laws of Malta.
Rate quoted on the 6-month term deposit account is gross of tax on a per annum basis. Interest is paid into a savings account. Accounts can be opened with a minimum of €100 and deposit must be kept in the account for the duration of the 6 months. Terms and Conditions apply and are available upon request.
