Savings accounts and fixed-term deposits
A savings account is available daily at a variable rate. A fixed-term deposit locks your money for a set term at a fixed rate. Both are storage, not wealth-building.
A savings account is the account for your emergency fund. You can reach the money any time, but the rate can change any time too. Introductory offers for new customers often drop sharply after a few months.
A fixed-term deposit usually pays a bit more, but you can't touch it until the term ends. That suits money with a known date, like a planned purchase in two years.
Both are protected in the EU by statutory deposit insurance up to €100,000 per customer per bank. If you have more, spread it across several institutions.
Important context: after subtracting inflation, both usually leave you with little or nothing. They're there to park money safely, not to build wealth. Confuse the two, and twenty years later you'll wonder why.
Statutory deposit insurance in the EU covers €100,000 per depositor per institution. Note that several brands can belong to the same institution, which doesn't multiply the protection. With offers from foreign banks via brokerage platforms, protection follows the home country and its guarantee scheme, whose robustness depends on that country's financial strength.
Economically, the return gap between savings accounts and fixed-term deposits contains a liquidity premium: the bank compensates you for the predictability of locking up the funds. Under an inverted yield curve, where short terms pay more than long ones, this premium can vanish or reverse, making long fixed-term deposits unattractive.
What matters for evaluation is the real after-tax return. At a nominal 3 percent rate, roughly 26 percent flat tax, and 3 percent inflation, the real after-tax return comes to about −0.8 percent. That figure isn't an exception, it's typical: over long periods, interest on bank deposits after tax and inflation often sits around or below zero.
| Savings account | Fixed-term deposit | |
|---|---|---|
| Access | any time | only at maturity |
| Interest rate | can change any time | fixed for the term |
| Typical level | usually a bit lower | usually a bit higher |
| Good for | emergency fund | a goal with a fixed date |
| Protection | deposit insurance up to €100,000 | deposit insurance up to €100,000 |
| After tax and inflation | often around or below zero | often around or below zero |
Summary
- Savings accounts for the emergency fund, fixed-term deposits for goals with a set date.
- Deposit insurance applies per customer and institution, not per brand.
- After tax and inflation, typically little to nothing is left.
Did you get it?
What suits a fixed-term deposit, and what doesn't?
Money with a known date. Not the emergency fund, since you can't access it.
What should you watch for with deposit insurance?
That several brands can belong to the same institution, so protection doesn't multiply as a result.
What typically remains, in real terms, after tax?
Often around or below zero. Interest accounts usually don't preserve purchasing power.