What is TDA full form in Banking?
The TDA full form in banking is a time deposit account. A time deposit is a bank account that earns interest and matures on a specific date. To earn the given interest rate, the money must be kept in the account for the specified period. Time deposits often yield a slightly greater rate of interest than conventional savings accounts; the longer the maturity period, the bigger the interest payment in time deposits.
Why do banks offer time deposit accounts?
Time deposit accounts give banks the necessary cash flow to lend money to other customers. The bank makes a profit by lending cash from time deposit accounts at a greater interest rate than the rate it pays on the deposits. It also offers investors a fixed interest rate on the money until maturity; they are also considered to be risk-free investments and offer a higher rate of interest than regular savings accounts.
Early withdrawal penalty with time deposits:
If a person needs to access the funds in their time deposit account sooner than the agreed-upon term, they may be required to pay an early withdrawal fee. This penalty varies depending on the bank or credit union and the length of the account’s term, but it can result in a large amount of interest earned on savings. Some institutions provide no-penalty CDs, which may still have a greater APY than a savings account but allow for early withdrawals.
- TDA, full form in banking is a trade and development agency.
