Why You Should Start a Time Deposit for your Small Business
So, you want to set up your own small business? One of the main things to get when you start is opening a business savings account. Saving is important for everybody, more so for entrepreneurs like you. If you have surplus cash, tuck it away and let it grow! You’ll always need funds for a rainy day (the most obvious case right now is the ongoing pandemic) or save for a big purchase that’ll take your business to the next level. You might even want to expand your company sometime and need extra money to do that. A good place to put your small business savings is a time deposit. It’s low risk and safe compared to other financial instruments. Also, you’ll be able to know exactly how much you’re getting after locking up your money for a certain period that you’re comfortable with.
Savings Account VS Time Deposit Account
And why would it be better than putting it in a regular savings account?
In the latter, you’d be more tempted to withdraw money at any time, while in a time deposit, you won’t be able to touch it until your term is up. It doesn’t matter how disciplined you are. If the cash is easily accessible, you will find ways to spend it.
One major benefit of time deposit accounts is that they allow you to earn interest on your savings. You don’t have to worry about losing your money because your interest rate is guaranteed.
You also might be wondering what sort of time deposits offer high returns, since most banks advertise measly interest rates that’ll barely allow your money to grow larger.
This is where digital banks come in—they offer the best interest rates. They can afford to give higher interest rates because the majority of them operate solely online versus traditional banks with physical branches and higher costs.
One of the best time deposit interest rates in the Philippines is Tonik’s 6% per annum.
Getting a time deposit would be beneficial for your small business not just because of the incredibly high-interest rate, but also because of the following reasons:
Convenience
We’re talking about digital banks here, so opening an account would be easy as pie. Everything can be done at the touch of your fingertips and within 15 minutes or even less.
All you’d need to do is finish the onboarding process on the app, which includes filling out some forms and scanning your face and valid IDs for verification. Creating a Time Deposit and topping it up with some money would take even less time.
No need to queue in the bank and fill out endless forms. You don’t even have to leave the comfort of your home to open an account.
Flexible Terms
Whether you want to keep your cash locked up for as short as 6 months or as long as 2 whole years, it’s all up to you! Other banks have different terms that can be shorter or longer than these. Time Deposits have maturity periods of 6, 9, 12, 18, and 24 months. You decide on the terms you want to keep your small business funds safe.
You Can Withdraw Your Funds Early
The most obvious benefit of having the option of withdrawing your funds at any time is convenience. You can take your money out whenever you want to. This means that you can use it for whatever purpose you wish.
Got a small business emergency that you really need extra money for? No worries. Your Time Deposit cash won’t be on total lockdown. When you withdraw your funds early, you’ll still be earning 1% p.a.
Of course, you’ll earn more interest if you decide to keep your money in the time deposit account. That’s part of the beauty of a time deposit. You’ll think twice before touching your money that you’ve already allotted for a specific purchase or investment.
Safe and Secure
Digital banks are very secure. You can sleep well knowing that your funds are earning you money as time passes. All deposits in the Philippines are insured by PDIC up to PHP500,000 per depositor. So don’t worry about anything happening to your hard-earned funds!
Conclusion
Saving money for your business in a time deposit account makes a lot of sense if you have surplus cash, if you’re saving for a major purchase, or if you want to have enough funds for the rainy days.
With a time deposit, particularly in a digital bank, your money earns more interest, is safe, and you decide on how long you want your money to be locked in. You don’t have to worry about the ups and downs of the market unlike if you put your money in the stock market.
If you need your money sooner, you’ll still be able to get your money ASAP but will lower interest rates.