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Savings account or fixed deposit: where should your money sit?

Both are bank deposits, but they do different jobs. How to split money between them based on when you'll need it.

Financialdiary Editorial Team

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Sample article

This is placeholder content written while the site is being built. It is not yet reviewed editorial advice.

A savings account is for money you may need at any time. A fixed deposit (FD) locks money for a chosen period in return for a higher, fixed interest rate.

How they differ#

Savings account and fixed deposit compared
Savings accountFixed deposit
AccessAny timeAt maturity; early withdrawal usually has a penalty
Interest rateLower, can changeHigher, fixed for the term
Best forMonthly spending, first part of emergency fundMoney not needed for a known period

Deposit insurance#

Bank deposits in India are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to a limit per depositor per bank. Check the current limit on the DICGC website before placing large amounts in one bank.

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