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Questions
Distinguish between:
Demand deposit and Time deposit
Give two differences between time deposit and demand deposit.
Give two differences between time deposit and demand deposit.
Distinguish between demand deposits (current account) and time deposits.
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Solution
| Sr. No. | Basic for comparison | Demand deposit | Time deposit |
| 1. | Meaning | Deposits that are withdrawable on demand are known as demand deposits. | Deposits that are repayable after a certain period of time are known as time deposits. |
| 2. | Time Period | There is no fixed time period involved in the case of a demand deposit. | Time deposits are deposited in the bank for a fixed period of time (usually 1 year to 5 years). |
| 2. | Example | Savings accounts and current accounts are examples of demand deposits. | Fixed or term deposits are an example of time deposits. |
| 3. | Rate of Interest | In the case of savings and current accounts, it is lower (which is around 4 to 6 percent). | The rate of interest offered by the banks on time deposits is higher, around 7 to 9 percent. |
| 4. | Facilities | In the case of demand deposits, one needs all facilities like ATMs, credit cards, and online banking, as these accounts are meant for the withdrawal of funds as and when required by the account holder. | In the case of time deposits, one does not need facilities like ATMs, credit cards, or online banking, as funds are tied for a specific period. |
Notes
Students should refer to the answer according to their questions.
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