demand deposits vs. time deposits

Demand deposits are funds stored in bank accounts that you can access anytime without prior notice, such as checking accounts. They offer high liquidity, meaning you can withdraw or transfer money instantly. Time deposits, like certificates of deposit (CDs), require you to lock in your money for a set period (months or years) in exchange for higher interest rates. They aren’t as flexible as demand deposits because early withdrawals often incur penalties. Essentially, demand deposits provide quick access to funds, while time deposits prioritize earning interest over accessibility during the fixed period.