You might have often come across people saying that when you want to put money to earn good returns, investing in a fixed deposit (FD) is what you should consider. Stashing your cash in a savings account is never considered one of the options. When you open FD, you are entitled to higher interest rates than any savings account type, such as an instant savings account.

Are you wondering how an FD can be better than a savings account? To clear your air of confusion, we have listed below a few reasons why choosing the former will be more suitable if you want to earn good returns. However, before that, let us look at a few of the differences between an FD and a savings account.

Differences Between An FD And A Savings Account

  • You can put an unlimited amount of money in a savings account, whereas an FD may or may not have an upper cap based on the financial institution.
  • When you park your money in a savings account, there is no fixed time frame, whereas an FD has a speculated tenor that may vary from seven days to 10 years.
  • The interest rates may vary, whereas FDs have a fixed interest rate according to its duration.
  • The time period for which you stored your funds, the amount, or your age does not affect the interest rates; however, it is the vice-versa for an FD.

Now that you know the differences let us look at why you should pick an FD over a savings account.

Reasons You Should Choose An FD

  • When you have a significant amount parked into your savings account, it would be best to invest in an FD, even if for the short-term, because it will earn you more than it is returning now, lying in the former account type.
  • FDs offer more interest rates; hence, investing in one to grow your money is more profitable than putting your cash into a savings account.
  • It would be better to open FD, to fulfill a goal within two months because the returns are more than a savings account, and so are your gains within the stipulated time.
  • If you fall under the senior citizen category, an FD is a better option because you will be eligible for 0.5% more than the fixed interest rates.
  • Open FD if you want to create a credit history to utilize it as collateral while securing a loan.
  • Some of the financial institutions charge relatively low-interest rates for Credit cards that can be secured with an FD.
  • One of the significant reasons you should invest in an FD rather than a savings account is that you will be liable for a tax rebate.


By now, you might have realized why opening an FD is a much better option than going for a savings account when you want to save money and also gain good returns. We hope we have helped you determine investing in a fixed deposit can provide you with more earnings in a short span of time.

Previous articleHow to Find the Best Hair Transplant Clinic?
Next article5 Tips To Keep Your Roof Burglar Proof
Lara Herrington
With over 12 years of experience, she is a proficient content writer and editor specializing in a diverse range of subjects, including technology news, country news, arts, science, travel, and automobiles.


Please enter your comment!
Please enter your name here