Time deposits with principal guaranteed: renewal, early withdrawal and maturity

Do you have a time deposit? If so, this is important:

• If it can be renewed, check what has been agreed: normally it is possible for the deposit to be extended tacitly, i.e. automatically, without your express consent. Also, the conditions can sometimes change when it is renewed ... So, to avoid problems, it is essential to see if your agreement clearly details:

  • The way of expressing your acceptance or refusal of extension of the agreement.

  • The new terms and conditions that will apply in the event that the deposit is extended, or the mechanisms by which they would be determined.

  • The obligation on your bank to give you reasonable notice of the precise terms of the extension or, if that is what has been agreed, to notify you of such terms at the time of extension of the deposit at the latest. In the latter case, if you do not agree to the terms you must be allowed to return to the previous terms and conditions within one month of the notification.

• Also check carefully what happens in the event of early withdrawal: i.e. if you wish to access your money before the deposit matures. The agreement may or may not provide for this possibility:

  • If it does, the agreement may provide for a penalty which, since the return of the total amount of the investment is guaranteed, cannot be more than the gross interest earned from the start of the deposit up until the date of withdrawal. However, remember that the bank must make the relevant deduction of tax on the interest, so that the final net amount you receive may be less than the amount initially deposited.

  • If not, then you cannot withdraw your money early, unless you come to an agreement with your bank.

• Lastly, in the event that your deposit is terminated, whether early or when it matures, your bank must repay the principal without any unjustified delay. Also, it must provide you with a statement, so that you can check if the interest received and the fees paid are correct.