101: Understanding time deposits

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a woman standing in front of a clock and sand timer as it counts down to the day that she can withdrawal her deposits.

Are you looking to manage your money wisely? Maybe you’ve heard the term “time deposits” in your bank’s offerings but aren’t quite sure what it means or how it can benefit you. Well, you’re in the right place! In this blog post, we’ll break down the concept of time deposits and why they can be a smart financial move for you.

What Are Time Deposits?

Let’s start with the basics!

A time deposit, also known as a fixed deposit or certificate of deposit (CD), is a type of savings account offered by banks and financial institutions. Unlike a regular savings account where you can deposit and withdraw money freely, a time deposit requires you to deposit a specific amount of money for a predetermined period, known as the term or tenure.

During this period, you cannot withdraw the funds without facing penalties, although you’ll typically earn a higher interest rate compared to a regular savings account.

How Do Time Deposits Work?

When you open a time deposit account, you agree to keep your money in the account for a set period, which can range from a few months to several years. The longer the term, the higher the interest rate you’ll typically earn. At the end of the term, you can choose to withdraw your initial deposit plus the accumulated interest, renew the time deposit for another term, or withdraw only the interest and keep the principal amount invested.

Why Consider Time Deposits?

Now, you might be wondering, why should I bother with a time deposit when I can just keep my money in a regular savings account? Here are a few reasons why time deposits can be a smart financial move for Saudi teens and young adults:

  1. Higher interest rates: time deposits usually offer higher rates than regular savings accounts. This means your money can grow faster over time, helping you reach your financial goals sooner.
  2. Discipline: by locking your money away in a time deposit, you’re less tempted to spend it impulsively. This can help you cultivate good savings habits and resist the urge to dip into your savings for unnecessary purchases.
  3. Safety: time deposits are generally considered low-risk investments because they’re backed by the bank’s guarantee. So, you can rest assured that your money is safe and secure.
  4. Financial goals: whether you’re saving up for university, a car, or your first apartment, time deposits can help you achieve your financial goals by providing a reliable way to grow your money over time.
Are they available in Saudi Arabia?

Yes, they are and they are Shariah-complaint! Banking institutes like SAIB, Riyadh Bank, BSF, and ANB offer time deposits to their customers.

We’ve got some facts for you showing how the people in Saudi Arabia have been utilizing time deposits. A recent report by Argaam came out and reported that “the share of time and savings deposits rose to 28.5% from 23.5% in January 2022, hitting the highest level since September 2017.” Clearly Saudis are looking at this as a good saving method.

Some things to keep in mind

When selecting a time deposit, here are a few things to keep in mind:

  • Interest rate: compare interest rates offered by different banks to find the best deal. Remember, the longer the term, the higher the rate usually is.
  • Terms and conditions: read the fine print carefully, paying attention to any fees, penalties, or restrictions associated with the time deposit.
  • Renewal options: consider whether you want the option to renew the time deposit automatically or if you prefer to reassess your options at the end of the term.
  • Penalty for early withdrawal: we’ve lightly touched on this, but if you decide that you need to take your money out before the withdrawal date then you will have to pay a fine.
  • Inflation: time deposits may not always keep up with inflation.

In Saudi Arabia, many banks offer customers the ability to pick time deposits. Those offered in Saudi Arabia are not so dissimilar from the ones provided by conventional institutes. You can take a look at what your bank offers. It is a great way to begin saving, as you are incentivized to put a set amount away for future use. It also teaches discipline, which in our opinion is a great introduction.


Time deposits can be a valuable tool for Saudis looking to grow their savings and achieve their financial goals.

We think it is a great option for beginners! By locking your money away for a fixed period, you can earn higher interest rates, develop disciplined saving habits, and work towards a brighter financial future. So, why not consider opening a time deposit account today and take control of your financial destiny? Your future self will thank you for it!



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