A fixed deposit, a certificate of deposit and a savings account are not three competing inventions. The first two are the same product wearing different names in different countries, and the third is what both are measured against. This guide separates the real differences — the rate, the access, the insurance, the tax timing — from the naming, using official rate data rather than any bank’s marketing.

Same product, three names

A fixed deposit (FD) is a lump sum placed with a bank for a fixed tenure at a fixed rate, repaid with interest at maturity. A certificate of deposit (CD) is the United States’ name for the identical contract, and term deposit is the generic label used in much of the rest of the world. The mechanics do not change with the vocabulary: you lend the bank money for a set period, the bank guarantees the rate, early exit costs a penalty, and interest compounds on the schedule in the contract — quarterly for most Indian FDs, and on the schedule stated in the CD’s terms in the US. Everything else in this guide applies to all three names, and the FD Calculator on this site computes any of them.

The rate: what the lock-in buys

A savings account pays for instant access with a lower rate; a term deposit pays for your patience with a higher one. The cleanest way to see the gap is the official average of what every insured US institution pays, published monthly by the FDIC:

FDIC national rates as of 19 October 2026 (FDIC.gov); the interest column is a simple deposit × rate approximation for the two products a saver chooses between for a full year. Averages span every insured bank and credit union, including the largest banks, which pay the least — the rate a shopper actually gets at a competitive or online bank is typically well above the average, on both sides of the comparison.

Even at the averages, the shape of the trade is clear: locking $25,000 for twelve months earns roughly four and a half times the interest of leaving it in savings. Whether that trade is worth it depends entirely on whether the money might be needed inside the year — which is the access question, below.

FD rates in India: why the numbers look so different

Readers comparing across countries notice that Indian FD cards quote far higher rates than US CD averages, and the reason is not generosity. Deposit rates in every country shadow that country’s policy rate and inflation. The Reserve Bank of India raised its repo rate to 5.50% on 7 October 2026, well above the US policy level, and Indian bank FD rates are set bank by bank against that backdrop — each bank’s card is its own commercial decision, repriced as its funding costs move. A 7% FD in a 5.50%-repo economy and a 4% CD in a lower-rate economy can represent almost the same deal in real terms. Compare any deposit against its own country’s savings rate and inflation, never against another country’s headline.

Insurance: identical shelter, different flags

Deposit insurance treats savings and term deposits the same way at the same institution. In the US, the FDIC insures deposits up to $250,000 per depositor, per insured bank, per ownership category (credit-union deposits carry the same limit through the NCUA). In India, DICGC insures bank deposits up to ₹5 lakh per depositor per bank, principal and interest combined (the amount is stated in rupees, as Indian law states it). Insurance is therefore not a reason to prefer savings over an FD at the same bank — both sit under the same ceiling — but it is a reason to spread deposits that exceed the ceiling across more than one bank, whichever product holds them.

Access and early exit

Here the products genuinely part. A savings account is the money you can reach today, in full, at no cost. A term deposit is the money you have promised not to reach: breaking it early triggers the penalty mechanism — interest recalculated at the rate for the time actually served, minus a penalty — priced in full in the companion guide on breaking an FD early. Partial access designs (sweep-in accounts, partial withdrawal at some banks, no-penalty CD variants at a lower rate) soften the edge but never remove the trade. The honest summary: the term deposit’s higher rate is not a gift; it is the price of your liquidity, and it is fairly priced only when the tenure is matched to a date the money is genuinely not needed before.

Tax timing

In the US, interest on both savings and CDs is taxed as ordinary income in the year it is credited — and on multi-year CDs the IRS generally treats interest as credited annually even if the cash arrives at maturity, so the tax can precede the money. In India, FD interest is taxed at your slab rate, with TDS deducted by the bank under Section 194A once its interest to you in a financial year crosses ₹50,000 (₹1,00,000 for senior citizens), thresholds in force since 1 April 2025 under the Finance Act 2025; senior citizens also have the Section 80TTB deduction of up to ₹50,000 on deposit interest. None of this changes which product earns more before tax — it changes what you keep, and it punishes the multi-year CD holder who forgot the annual tax bill.

The fine print that actually differs

Beyond the headline rate, four contract details separate individual offers — and none of them is visible in the product’s name. Auto-renewal: many US CDs renew automatically for the same term at the then-current rate if you give no instruction during a short grace period after maturity (often about a week); Indian FDs commonly auto-renew similarly at the card rate. A forgotten renewal can lock money for a whole new term at a rate you never chose — the maturity instruction is part of the product. Minimum deposits: savings accounts open for almost nothing; term deposits often carry minimums, and better rate tiers may start well above them. Interest payment: an FD’s interest may compound inside the deposit or be paid out on a rhythm (the monthly-payout version gets its own guide in this series); a CD’s interest may be credited to the CD or paid out by cheque or transfer, and paid-out interest stops compounding — the same trade in both countries. Rate guarantees: a fixed-rate FD or CD holds its rate to maturity whatever the central bank does; a small number of variable-rate term deposits exist and are a different animal — the word “fixed” in the deposit’s name is the guarantee to check for.

The measure nobody prints: the real return

Both products quote nominal rates; what your savings gain is purchasing power. The working approximation is real return ≈ nominal rate − inflation over the same period. It reframes every comparison in this guide: a savings account at 0.38% in a 3%-inflation year is a guaranteed small loss of purchasing power in exchange for total flexibility — a fair price for an emergency fund, a poor one for five-year money. A term deposit at a competitive rate is usually the only insured product with a chance of beating inflation at all, which — more than the headline gap over savings — is the real argument for locking money you will not need.

A two-country shopping checklist

Whichever name is on the door, the comparison that protects you is the same five lines long. Effective yield, not headline rate — convert the quoted rate with its compounding schedule ((1 + r/n)^n − 1) before ranking two offers; the FD vs CD maths in this series’ hub does it in one line. The premature-closure clause — the repricing rule and the penalty points, in the contract, before you book; it is the only clause most depositors ever meet the hard way. The maturity instruction — payout, renewal or transfer, given by you in advance, because the default is the bank’s choice, not yours. The insurance ceiling — $250,000 per depositor per bank in the US, ₹5 lakh in India; a deposit above the ceiling at one bank is a reason to open the second account, not to accept the exposure. The payout schedule — interest compounded inside, or paid out monthly, quarterly or at maturity; the choice changes the final figure more than most rate negotiations do. A savings account needs none of this checking, which is itself the point: flexibility is what its lower rate buys.

Which fits when

The decision is a matching exercise: the product is chosen by the date the money is needed, not by the rate on the poster.

Sources: FDIC, National Rates and Rate Caps, as of 19 October 2026 (fdic.gov); Reserve Bank of India, Monetary Policy Committee resolution, 7 October 2026; DICGC deposit insurance limit; Finance Act 2025 (Section 194A thresholds, effective 1 April 2025). Rates are official aggregates and policy rates, quoted as context — no individual bank’s rate is stated anywhere in this guide.