Term account: definition and operation

What is a term account? 💰

The term account (CAT) is a savings product offered by banks. This is a secure and risk-free investment that involves blocking an amount of money for a predetermined period, in exchange for guaranteed remuneration in the form of interest.

Unlike traditional bank passbooks, the term account is rigid: you make a single payment at opening and you cannot fund it afterwards. Similarly, your capital remains blocked until maturity (except in the case of early withdrawal subject to penalty).

How does a term account work? ⚙️

The opening of a CAT is simple:

You define with your bank the amount of the deposit, the duration of the investment and the interest rate.

The rate can be fixed, variable or progressive. Example: a progressive rate will increase each year to reward your loyalty.

Interest is calculated over the duration of the investment and can be paid at the end of the contract or at regular intervals (quarterly, semi-annual, annual).

👉 Example: you place €20,000 for 3 years at a fixed 2.50%. At maturity, you recover your €20,000 + €1,500 gross interest.

The conditions of a CAT 📋

Minimum duration: 1 month

Maximum duration: in practice rarely beyond 5 years (legal maximum: 10 years)

Minimum amount: generally €1,000 (depends on the banks)

Maximum amount: unlimited

Fees: no opening, management or closing fees

In summary

The term account is an ideal investment for those who seek:

✔️ The security of capital

✔️ A yield known in advance

✔️ A simple solution to grow capital in the short or medium term