What is typically required before withdrawing from a time deposit?

In the context of time deposits, also known as certificates of deposit (CDs), a withdrawal typically requires advance notice to the bank because these instruments are designed to encourage customers to leave their funds deposited for a specified term. The correct answer indicates that a seven-day notice is often required.

This period gives the bank time to manage its liquidity and respond to the withdrawal request without disrupting its financial planning. Time deposits usually have fixed durations, and withdrawing funds before the maturity date often incurs penalties. While the specific notice period can vary based on the financial institution and the terms of the deposit, seven days is a common timeframe.

In contrast, the other options suggest different durations of notice. Some might imply that no notice is needed, which generally does not apply to time deposits due to the commitment involved. A three-day notice is shorter than typical requirements and may not align with institutional policies, while a full month’s notice is longer than what is generally needed. Therefore, requiring a seven-day notice strikes a balance between the bank's operational needs and the rights of the depositor to access their funds.