Term Deposits

Term deposits are fixed-term savings or investment accounts where money is locked away for a set period — from a few weeks to several years — in exchange for a guaranteed interest rate.

During the term, the depositor generally cannot withdraw funds without penalty, but earns a higher rate than on instant-access accounts. At maturity, both the principal and interest are paid back to the depositor.

Term deposits are also known as time deposits or fixed deposits and are widely used by businesses and investors to earn predictable returns on surplus cash.

Example:

A company places £100,000 in a 12-month term deposit at 4.5% interest. After one year, it receives £104,500 — the original amount plus interest.

Used in:

Treasury management, corporate cash reserves, and low-risk investment strategies.