Capital investment fixed deposit: Binding term and yield

If you want to save your money, you have various alternatives with a low risk of default. Among others, time deposits. Compared to objects (cars, art & Co.), time deposits offer a stable form of investment. At the same time, however, the interest rates provide a very low return. If you want to set up a new account, it is best to start online. Comparison portals such as Check 24 and others provide an overview.

Back to the Capital Investment editorial.

Fixed Deposit Account: Advantages and disadvantages

Typical questions are:

• Where can I find the best interest rates for fixed-term deposits?
• What is the fixed deposit?
• Which bank offers the best interest rates?
• How is interest calculated on call money?
• How do you calculate the interest? – more under calculation
• How does the call money account work?
• Which bank is the best and cheapest?
• Which bank gives the most interest on savings accounts?
• Which bank is recommended?

Availability of time deposit and term

Money that you don’t need to access for the next 1 to 3 years can be invested in a fixed deposit account. The longer the term, the higher the interest.

Fixed-term deposits offer the advantage of a simple set-up, stable interest rates and different maturities are selectable early termination often not possible, termination only possible for a fee. The risk assessment of time deposits is therefore low compared to the capital investment alternatives. However, due to the current interest rate situation, the current return on time deposits is just as low as the risk – a consideration that every saver must make for himself. So just like a savings account, fixed-term deposits are easy to set up, they offer stable interest rates and you can choose different maturities. Conclusion: Many advantages, few returns.

Facts about fixed-term deposits

The most important 3 facts about fixed-term deposits:

• For capital that is not essentially needed
• Binding term (prior exit only with losses)
• Fixed return after time

Overall, fixed-term deposits are suitable for people who can do without a portion of their capital for a certain period of time. This is invested with a fixed term, and in return you get a fixed return.

Advantages of time deposits

• Simple setup
• Stable interest rate
• Flexible terms (but term commitment)

Disadvantages of the time deposit

• Early termination (often) not possible
• Cancellation only give fee

Calculation of interest

If you want to calculate interest, you have various ratios to calculate. These include, among others:

Annual interest

Interest per year = (investment capital x interest rate) / 100

Example calculation:

Interest per year = (50,000 Euro x 2.5) / 100 = 1,250 Euro

Interest per day

Interest for t days = (investment capital x interest rate x t) / (100 x days per year)

Comparison of call money, fixed-term deposits and savings books

	Fixed Deposit	Savings bond	Savings bond
Possible interest	from 0 up to 0,50	From 0,001 to 1,97	0,1 to 1,97
Investment amount	1 to unlimited	1 to unlimited	1.000 Euro to unlimited
Investment period	unlimited	30 days to 10 years	1 to 10 years
Security	at least 100,000 euros through the statutory deposit guarantee (note S&P country rating)	at least 100,000 euros through the statutory deposit guarantee (note S&P country rating)	at least 100,000 euros through the statutory deposit guarantee (note S&P country rating)