Formal financial institutions offer a wide variety of savings products.
Ordinary savings is the most widely used type of account for regular transactions because the timing and amount of deposits and withdrawals are flexible. Typically, you are allowed a set number of “free” transactions each month and will be charged a fee for any additional ones. In exchange for the right to make frequent transactions, the bank pays very low interest on passbook savings accounts.
Contractual savings are an alternative form of savings that require you to deposit a fixed amount regularly over a pre-determined period. Although contractual savings can be structured in many ways, access to savings often is restricted until the contract is fulfilled, and you will be charged a penalty for withdrawing your funds early.
Time deposits require a fixed sum to be deposited for a pre-determined amount of time and interest rate. They are not accessible during this period, but generally, yield a higher interest rate than regular or contractual savings. You may be interested in this account if you receive a lump sum of money that you do not need immediately. To save for a future goal and earn maximum interest, you can use this account to place that money out of reach for a pre-determined amount of time.