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The term account is a savings account that allows you to benefit from a very interesting and attractive interest rate. Be careful though, it is only possible to take advantage of it under certain conditions and this is precisely what characterizes it. So what is it exactly? How does a time deposit account work? What is his pay? Answers!
What is a term account?
The term account is a savings bank account on which you can benefit from a very attractive interest rate. In return, the sums deposited are blocked for a period that can range from a few months to several years, so it is the contract that frames the agreement between the bank and the customer that will govern the details of this agreement. What’s more, the interest you will receive on your term account is subject to income tax and social security contributions (everything you need to know about the term account).
The rules of the term account are governed by contractual freedom, ie the agreement concluded with its bank. There are therefore a multitude of possibilities with a term account at a fixed rate (guaranteed for the duration of the account), at a progressive rate (which increases over time, hence the interest in keeping your account as long as possible ), at variable rate (indexed on a market rate or a reference index, it can therefore go up or down), the opening of several CATs with different commitments or even the opening of a CAT with other savings products.
How to open a CAT?
The opening of a CAT is done like any other savings contract. This means that you must first take note of the offers offered by a banking institution to choose the one that best meets your expectations and sign a contract to seal the deal. The bank obviously has an obligation to explain to its client how the CAT works before signing the contract and in the case of a variable rate term account, it will provide him with dedicated information documents.
In the contract, we will find basic information such as the minimum and maximum deposit amount, the duration of the contract, the interest rate with its method of calculation and its payment date, the penalties in the event of withdrawal before maturity and the conditions for renewing the contract.
A single payment can then be made to the account without the possibility of adding an additional sum afterwards. The entire capital of the account is therefore paid from the start. The contract can be concluded for a fixed or renewable period. It is possible to withdraw the funds or part of it before the end of the stipulated period, but penalties apply.
Why open a term account?
As the term account is fixed and blocked for a certain period, it is not intended for everyone, but can meet many needs. It is for example an interesting alternative to the booklet whose rate will often be lower than that found with a CAT. However, it requires having capital to save from the start. It can be an interesting way of not letting your money “sleep” while waiting to realize a specific project such as a real estate purchase or any other major investment, for example. You can also choose the CAT to put money aside for a loved one like your children for example, the end of the waiting period will then correspond to their majority for example.
