Every family faces a common financial problem: keeping idle funds in the bank for a certain amount of interest. This issue is especially important for many families, especially one-child families, as they usually have some savings but also need flexibility to deal with possible emergency expenses. But how should we choose between demand and time deposits, and whether it is more cost-effective to have a one-year or three-year term for a fixed deposit?
1. Demand Deposit and Time DepositBefore deciding on the deposit period, we first need to understandDemand Deposits and Time DepositsThe basic difference between them. A demand deposit is a type of deposit that allows you to access funds at any time, usually without prior notice to the bank, but with a relatively low interest rate. Fixed deposits, on the other hand, are deposited in a bank and locked in for a fixed term, which cannot be withdrawn in advance during the term, but usually offer a higher interest rate. While demand deposits offer a high degree of flexibility in funding, their interest yield is relatively low and may not be the best option for those looking for higher profits. This is where fixed deposits become a highly considered option.
2. Time Deposit Term SelectionWhen choosing a time deposit term, we are usually faced with different choicesIt includes one-year, three-year, and five-year terms。However, for most people, the most common options are usually one-year and three-year terms. So, between the two, which one is more cost-effective?One-year time deposits usually offer relatively high interest rates and have shorter maturities and more flexible funding. On the other hand, the interest rate on a three-year fixed deposit is also relatively high, but the funds need to be locked in for a longer period of time. Therefore,Which term to choose depends on the individual's financial needs and risk tolerance. 
3. Interest Rate ExamplesTo better understand the interest rate difference between one-year and three-year time deposits, let's look at some typical interest rate examples. Let's assume that the interest rate for a one-year fixed deposit is 19%, while the annual interest rate for a three-year fixed deposit is 30%。If you deposit $10,000 in a one-year fixed deposit, you will receive $190 in interest after one year. And if you choose to deposit the same amount into a three-year fixed deposit, you will receive $270 in interest after three years. From the point of view of interest income,Three-year term deposits are significantly more attractive. 
4. Bank Selection AdviceWhen choosing a deposit term, choosing a bank is also crucial. In order to ensure the safety of your funds, it is recommended to choose a bank that is one of the four major state-owned banks, including:Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank。These banks usually have more robust risk control and protection systems, so deposits are safer and more reliable. In addition, you can also keep an eye out for the bank's promotions. Many banks regularly offer a variety of incentives, such as instant noodles, paper towels, cooking oil, etc., which can also increase your actual income with small rewards. 
So, why do banks offer fixed deposits with different maturities and higher interest rates?In fact, the way banks operate has to do with it. After the bank takes the deposits, it will use the funds to lend and earn interest on the loans. Fixed deposits with different maturities provide banks with deposits of different maturities** to help banks better plan the use of funds. Banks want to attract more deposits because this increases the amount of money they lend, which in turn earns more interest on their loans. As a result, banks are willing to offer higher interest rates to attract more fixed deposit customers. 
5. Personal Needs and Investment AdviceFinally, the decision to choose a one-year or three-year fixed deposit should be made according to the individual's needs and risk tolerance. If youIf you need to withdraw your funds at any time, or if you are uncertain about your future financial needs, a one-year term deposit may be more suitable。If youWith a certain amount of savings and can withstand a longer lock-in period, a three-year fixed deposit may be a more attractive option, as it usually offers a higher interest rate. 
In addition, you can also consider a strategy of keeping your spare money separate, putting a portion of your funds in a one-year fixed deposit and the other in a three-year fixed deposit to strike a balance between flexibility and interest income. When it comes to choosing between a one-year and three-year term deposit, there is no absolute right or wrong. Different periods apply to different individual circumstances. It's important to make informed financial decisions based on your financial needs and risk tolerance. Whichever deposit method you choose, you should be vigilant when it comes to bank options and interest rates to ensure the safety of your funds and get the most bang for your buck. Financial wisdom is a capability that every family should possess that will help in achieving financial goals and dreams.