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Cash and savingsrisk 1 of 5: cash-like, your money stays put

Term deposit

Rules, protection and tax below are for Japan.

What it is

You hand a bank a lump sum and agree not to touch it for a fixed time: six months, a year, up to five years. In return the bank promises a fixed interest rate for the whole period, higher than an account you can dip into, because the bank knows it can rely on your money.

At the end of the term you get your money back plus the interest. During the term you usually cannot withdraw at all, or only by giving up some or all of the interest.

It is the simplest way to earn a known return: no prices to watch, nothing to sell. The trade-offs are that your money is locked, and if rates rise after you lock in, you are stuck with the old rate.

How it works

  1. You choose a term and a provider and pay in a lump sum; minimums range from a small sum to a few thousand depending on the provider.
  2. The rate is fixed on the day you open it and does not change for the whole term.
  3. Interest is paid at the end, or yearly or monthly into another account, depending on the product.
  4. At maturity the provider writes to you; if you do nothing, many roll the money into a new term or an easy-access account at whatever rate applies then.

The honest pros and cons

For

  • You know exactly what you will get back, to the penny.
  • Usually higher rates than easy-access savings, because you have given up access.
  • Protected by a deposit guarantee scheme in most countries, up to a limit per person per bank.
  • No fees, no prices to watch, nothing to sell.

Against

  • Your money is locked; an emergency means losing interest or being unable to withdraw at all.
  • If interest rates rise after you lock in, you keep the old, lower rate until maturity.
  • Inflation can quietly beat the rate, so the money buys less at the end than at the start.
  • Interest may be taxed as income, depending on where you live and how you hold it.

Getting it in Japan

Time deposit (teiki yokin) available

Sold by every bank and by Japan Post, from 1 month to 10 years, with online banks and seasonal campaigns paying the most. The same 10 million yen deposit insurance applies, and interest is taxed at 20.315 percent at source.

  • Your protection: covered by the Deposit Insurance Corporation of Japan up to 10 million yen of principal plus interest per depositor per bank, together with other deposits at that bank (source, checked 2026-09-17)
  • Tax here: interest is taxed at a flat 20.315 percent, withheld by the bank (source, checked 2026-09-17)

How to start

  1. Compare online banks and seasonal campaigns; the big banks are rarely the best payers.
  2. Pick a term you can live without the money for, since early withdrawal drops the rate.
  3. Keep the total at any one bank under the 10 million yen insurance limit.

Wherever you are

  1. Decide how long you can go without the money; never lock away your emergency fund.
  2. Compare rates across providers for that term; the best rates are often from smaller banks you have never heard of, which is fine if they are covered by the deposit guarantee.
  3. Check the deposit guarantee covers the provider, and keep your total with any one banking group under the limit.
  4. Open the account online, pay in, and diarise the maturity date so the rollover is your decision, not the bank's.

Try it

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Go deeper

Also called

fixed-rate bond, fixed-term deposit, certificate of deposit (CD), guaranteed investment certificate (GIC), plazo fijo, CDB

Often confused with

  • Government bond: A loan to a government that pays interest and returns your money on a set date, called its maturity.
  • Savings account: Money kept at a bank that pays interest and can be withdrawn at any time.

Learn more, for free

Term deposit in Japan · wealth-coop