TIME DEPOSIT

also called Deposit Account, bank deposit for which advance notice of withdrawal is required or that may be withdrawn after the elapse of a specific period of time or on a specific date. There are several types of time deposits. Ordinary passbook savings accounts tend to be relatively small in value; thus, on deposits by individuals, the advance-notice requirement is usually waived. Nonnegotiable certificates of time deposit are contracts for the deposit of funds for a stated period of time at a rate of interest normally higher than that paid on regular passbook accounts. Negotiable certificates of time deposit emerged in the United States in the 1960s as a means of attracting funds in large amounts. Since 1966 the rate of interest has been higher on these than on other forms of time deposits. In the United States this rate has become a major instrument of Federal Reserve money-market control.