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Fixed-term deposit or savings account

A fixed-term deposit and an interest-bearing savings account are two simple, low-risk ways to make your savings earn interest. The main difference is when you can access the money.

Fixed-term deposit

You hand a sum to the bank for an agreed period, for example 12 months, and in return it guarantees a return known from the start.

• Advantage: you know exactly how much you will earn.
• Drawback: the money is tied up. If you withdraw early, you may lose interest or pay a penalty.

Interest-bearing savings account

An account that pays interest on the money inside, and you can withdraw it whenever you want.

• Advantage: the money is always available.
• Drawback: the bank can change the rate over time, and sometimes requires conditions, such as having your salary paid in, or pays interest only up to a certain amount.

What to check in both

• The TAE (APR), to compare fairly.
• The conditions: term, maximum amount and requirements to earn the interest.
• That the bank is covered by the Deposit Guarantee Fund, which protects up to €100,000 per holder and institution.

And taxes

The interest you receive is income that is taxed in your tax return. A withholding is usually applied. Check how it affects you in your case.

Which to choose

For your emergency fund, a savings account usually fits better because you need access. For money you will not use for a specific time, a deposit can give you a fixed return. Always compare with inflation: if the interest is lower, you will lose purchasing power.

Informational and educational content. Not financial advice.

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