Definition of deposits or term deposits is often called, is the product of a kind of bank savings services. Thus, the deposit you will put some funds or money by a certain amount, then the money should not be withdrawn within a certain period as well. Funds in the new deposits will be allowed and will be disbursed in accordance with the maturity date. Deposit products themselves usually have a maturity of 1, 3, 6, and 12. So, when you want to withdraw the deposit before the maturity date, then you will be penalized.
Deposits included as a safe investment product because it is guaranteed by the government through the Deposit Insurance Agency (LPS) with certain requirements. Therefore, it is important for you to know how to calculate interest on deposits. Then, what are the advantages of deposits? While you put money like savings, but the deposit interest rate is usually higher than regular savings. Interestingly, the interest can be taken after the due date, or put it to principal deposit to be deposited again in the next period. You can also extend the deposit automatically use the system ARO (Automatic Roll Over).
There is also a deposit which will be automatically extended after maturity, until the owner unfreeze deposits. How to Calculate benefit? As an investment, deposits such as ours (as an investor) provide loans to banks. In return, the bank will provide “interest” is high on the principal amount of funds that we lend. So how to calculate interest on deposits? For example, you place a deposit of funds amounting to Rp 100 million. Then, the bank gives you a list of products its deposit interest rate of 7% per year. Then you will receive a return on investment of $ 7 million and the return of the principal amount of Rp100 million per year. However, the value of the investment was in the can before taxes.
You should note; like a regular savings account interest, tax on interest on deposits over USD 7.5 million is 20%. Thus, the interest you earn will be deducted by the tax. The question, of which the Bank benefit? Of the funds collected deposits, banks will be lending (loans) to businesses. Then, the bank will receive interest payments on loans higher than deposit interest to you, for example, 12 percent per year. Well, from the difference between the interest that banks make a profit. Thus, the interest received from the corporate world and paid to depositors of 6 percent (7-12 percent) is often called a spread or a source of income for banks. Most importantly, try to know the characteristics of the deposit. Especially how to calculate interest on deposits and choose tenor / period of time, and the risk of penalties. That way you’ll gain enough understanding to determine the best deposit product which has a favorable investment value.
Because the banking interest rate in Indonesia is historically quite high and low risk, ultimately making deposits to the choice of most people. So clearly, the deposits are not as desirable as other investments, but at least our money is safe and the risk is small when stored in the Bank.