Savings Account vs. Term Deposit: Where to Park Your Money for Maximum Benefit

A savings account and a term deposit both generate interest income without requiring investment in securities or other financial instruments. But they serve different purposes: a term deposit locks away a fixed sum for a set period; a savings account gives you on-demand access to your money.

Don’t choose based only on the advertised rate. Your actual return depends on how interest is calculated, whether you can add or withdraw funds, how long a promotional rate lasts, and whether you must meet extra conditions—like spending a minimum amount on your card or paying for a subscription.

• What Is a Savings Account and a Term Deposit?
• Yield and Interest Rates
• Access to Funds
• Advantages and Limitations
• How Deposit Insurance Works
• Best Use Cases for Each Product
• How to Choose Between Them
• Tax on Interest Income
• Conclusion

What Is a Savings Account and a Term Deposit?

A term deposit (or bank deposit) is money you place with a bank under a contract that guarantees repayment plus interest. It’s opened for a fixed term—say, six months or one year. The interest rate, how and when interest accrues, whether you can top it up, and what happens if you close it early are all spelled out in the agreement.

A savings account is a bank account that pays interest on its balance. Unlike a term deposit, it has no maturity date. You can usually deposit and withdraw freely—but the exact rules depend on the bank’s terms.

Key differences come down to access:

• A term deposit runs for a fixed period;
• A savings account has no fixed end date;
• A term deposit may block top-ups or partial withdrawals;
• A savings account generally allows more flexibility;
• The interest rate on a savings account can change—if the agreement permits it.

Names don’t tell the full story. One bank may calculate interest on your daily balance; another applies it only to the lowest balance you held during the month. The Central Bank of Russia recognises both methods—and others—including using the minimum balance over the interest period.

Yield and Interest Rates

For a term deposit, income is straightforward: it’s based on the contracted rate, amount, and term. Some deposits offer one flat rate for the entire period; others use stepped rates—higher at first, then lower later.

On a savings account, the rate often comes with strings attached. Banks may offer a higher rate for new customers, for new funds, for balances above a threshold, or for subscribers to a paid service. Once the promotional window ends, the rate drops. That change must be allowed under the agreement and reflected in the bank’s published tariffs.

The Central Bank of Russia publishes a benchmark. In the second decade of June 2026, the average maximum rate on RUB-denominated deposits at the ten largest banks (by deposit volume) was 12.86% per annum. Average maximum rates varied by term:

• Up to 90 days — 12.39%;
• 91–180 days — 12.51%;
• 181 days to one year — 12.37%;
• Over one year — 11.36%.

A stated rate alone tells you little. A 15% rate applied to your lowest monthly balance may earn less than a 13% rate applied to your daily balance—if you regularly move money in and out.

Compounding matters too. If interest is added to your balance each month, future interest is calculated on a larger base. If instead it’s paid out to a separate account, compounding doesn’t happen.

Access to Funds

The main advantage of a savings account is that you can use your money without closing the account. You can transfer, deposit, or withdraw as needed. But those actions can cut your earnings.

If interest is calculated on the minimum balance, the bank uses the smallest amount held in the account during the billing month. Example: you start with RUB 500,000, then withdraw RUB 400,000 mid-month. Interest may be calculated only on RUB 100,000. Check the agreement to confirm how it works.

If interest is calculated on the daily balance, the bank applies the rate to whatever balance stood at the end of each day. A withdrawal reduces interest only for the remaining days of the month.

A term deposit assumes your money stays put until maturity. The bank must return your principal on demand—but if you close early, you may forfeit all accrued interest or receive it at a sharply reduced rate. The exact penalty is defined in the agreement.

Some term deposits allow partial withdrawals or top-ups. Others don’t. Those that restrict access often offer higher rates—but not always. It’s product-specific, not universal.

Advantages and Limitations

A savings account suits people who need regular access—like building an emergency fund or saving toward an open-ended goal.

Its main limitations relate to interest calculation:

• The bank may change the rate, if the agreement allows;
• A higher rate may last only a few months;
• The rate may apply only above a certain balance—or only to new customers;
• A withdrawal can shrink the balance used to calculate interest;
• The top rate may cover only part of your balance—not the whole thing.

A term deposit lets you lock in timing and returns. You know exactly how much you’ll earn—if you hold to term. But early closure risks losing interest, and flexibility is limited.

Before opening anything, verify it’s actually a bank deposit or account—not an investment product or life insurance policy. The Central Bank of Russia warns that some banks market investment-linked life insurance or hybrid products as ‘savings’ options. These aren’t covered by standard deposit insurance and carry different redemption rules.

How Deposit Insurance Works

Funds held by individuals in bank deposits and accounts at institutions in Russia’s Deposit Insurance System are state-guaranteed. If the bank fails, you get back 100% of your deposits—including accrued interest—but capped at RUB 1.4 million per person, per bank.

In specific cases defined by law, coverage rises to RUB 10 million. This applies to certain high-balance scenarios and select account types—including some escrow accounts—but only if all statutory conditions are met.

Always check whether a bank participates in the Deposit Insurance System before opening any product.

Best Use Cases for Each Product

A savings account fits money you might need soon: an emergency reserve, upcoming bills, or savings without a fixed target date.

But first, read how interest is calculated. If the bank uses the minimum monthly balance, even a short-term withdrawal of RUB 300,000 could wipe out most of that month’s interest.

A term deposit makes sense when you know both the amount and the date you’ll need it—for example, saving for a car in six months, with no interim need for the cash.

You can split your savings: keep accessible funds in a savings account, and park longer-term sums in one or more term deposits. But doing so at the same bank won’t increase your insurance cover—the balances are added together for payout purposes.

How to Choose Between a Term Deposit and a Savings Account

Start with timing. If you don’t know when you’ll need the money, focus on withdrawal terms. If you’re sure it won’t be touched for, say, nine months, compare term deposits.

When reviewing an offer, check:

1. The base rate and any promotional rate;
2. How long the promotional rate lasts;
3. Whether the bank can change the rate—and under what conditions;
4. Whether interest is calculated on the daily balance or the minimum monthly balance;
5. The maximum balance eligible for the advertised rate;
6. Any linked requirements—like card spending, subscriptions, or minimum transfers;
7. Whether you can top up or make partial withdrawals;
8. What happens if you close the term deposit early;
9. How and when interest is paid—and whether it compounds;
10. Whether the bank is in the Deposit Insurance System.

Banks must disclose the full cost of a term deposit—a single figure reflecting total interest payable under the contract. But that number doesn’t capture all conditions. Read the fine print.

Tax on Interest Income

The principal in a deposit or savings account isn’t taxed. Only the interest income is subject to personal income tax (PIT).

The taxable base is the amount by which your total annual interest—across all RUB-denominated deposits and accounts at Russian banks—exceeds the non-taxable threshold. That threshold equals:

Interest on RUB accounts with rates ≤1% for the full year—and interest on escrow accounts—is excluded from the calculation. The Federal Tax Service calculates the tax automatically using data reported by banks. You do not need to file a tax return for interest earned at Russian banks.

Tax on 2025 interest income is due in 2026. The Central Bank’s peak key rate in 2025 was 21%, so the non-taxable threshold was RUB 210,000. Tax applies only to interest above that. For Russian tax residents, the rate is 13% on taxable income up to RUB 2.4 million, and 15% on amounts above that. The deadline to pay tax for 2025 is no later than 1 December 2026.

The final non-taxable threshold for interest earned in 2026 will be known only after year-end—because it depends on the highest key rate on the 1st day of each month in 2026.

Conclusion

Choose a savings account when you need ready access. Choose a term deposit when you know the money won’t be needed until a specific date—and you want predictable returns.

No single product is always better. Compare effective rates, calculation methods, condition durations, withdrawal rules, tax impact, and your total exposure at one bank—including the RUB 1.4 million insurance cap.

FAQ

Which gives higher returns: a savings account or a term deposit?

Term deposits usually offer higher fixed rates—but only if funds stay locked. Savings accounts may provide lower headline rates, but their flexibility and potential for daily-balance compounding can improve real-world yield for active savers.

Is my money safer in a savings account or a term deposit?

Both are equally protected under Russia’s Deposit Insurance System—up to RUB 1.4 million per depositor per bank. Neither product type carries higher risk if the bank is a system participant.

Can I withdraw money early from a term deposit without losing all interest?

It depends on the bank’s terms. Some allow partial early withdrawal with prorated interest; others apply a much lower penalty rate or forfeit all accrued interest. Always review the early termination clause before opening.