Saving up a lump sum but unsure whether a time deposit or an installment plan is better? The names sound similar, but interest accrues completely differently, so the winner depends on your situation. Here's the clear version.
See how the interest differs at the same rate → switch the type in the savings maturity calculator to compare after-tax payouts.
The key difference
- Time deposit — park a lump sum for the whole term; interest accrues on the full amount from day one.
- Installment — pay in monthly pieces; later deposits sit for less time and earn less.
So at the same rate and total, a deposit earns more than an installment plan. That's why a "4% installment" pays real interest closer to half the headline rate.
When to use which
- Already have a lump sum → deposit. Don't let it idle; earn full interest for the term.
- Need to save bit by bit → installment. The forced-saving effect helps you build the lump sum.
- Relay strategy — build a lump sum with an installment plan for a year, then roll it into a deposit: the classic "installment → deposit" cycle.
Common trap: "the installment rate is higher!" — but with less time accruing, its real interest can match or trail a deposit. Always compare the after-tax payout.
FAQ
If the installment rate is higher, why is a deposit better?
Installment deposits sit for less time, so real interest is smaller. With a lump sum in hand, a deposit usually wins.
Is interest taxed?
Yes, 15.4% interest-income tax. The calculator shows the after-tax payout.
Installments to build, deposits to grow. When you have a lump sum, move it to a deposit and capture full interest.
This is general information, not financial advice. Confirm rates and terms with each institution.
