Difference Between CD and Savings (With Table)

In today’s fast-moving competitive world, it is of immense importance that the hard-earned money is invested in the right place to enable it to grow energetically.

There are multiple modes to invest in. CD and Savings are two of the most common and preferred options chosen by many. In fact, to some people CD and Savings may seem synonymous concepts, however, they are not the same. There are spring differences between CD and Savings.

CD vs Savings

The difference between CD and Savings is that CD is a financial instrument that provides a high-interest rate but with no instant liquidity, while Savings is a financial instrument that provides fewer interest rates but with quick availability of funds.

However, the above is not the only difference. A comparison between both the terms on certain parameters can shed light on subtle aspects:


Comparison Table Between CD and Savings (in Tabular Form)

Parameter of ComparisonCDSavings
MeaningCertificate issued by a financial institution indicating the amount deposited, period, maturity value, and interest.Type of account maintained with a bank to deposit money to earn interest and withdraw as necessary based on requirements.
Which one provides higher interest?Provides high interest compared to SavingsLess interest compared to CD
Is it possible to access the account through ATM?NoYes
Is it possible to withdraw money through cheques?NoYes
Is it possible to withdraw funds lying in the account at any time?No. In some cases, it may be possible with a penalty.Yes
Does it offer a higher rate of interest?YesNo
Could there be a penalty for withdrawing funds before maturity?YesNo, since there is no maturity period as such
Can it help to save for future purchases, education?Yes, as the money held is not instantly liquid so less tendency by people to withdrawNo, because people will tend to withdraw funds from Savings regularly and hence a large corpus generation may be difficult to achieve
Are additional deposits allowed over some time?No, the amount invested is a fixed amount at the commencementYes
Ideal for or most preferred byThose who want to earn high interest on their earned moneyThose who want instant liquidity
The ideal goal of the investorsSavings for medium or long termSavings for short term and immediate withdrawals
Which instrument comes with more restrictions from the financial regulator?CD will have more restrictionsSavings will have fewer restrictions
Could there be a minimum amount required to open the account?Yes, and the amount can be more than Savings.Yes, but the amount required will be minimal (however this may depend from bank to bank and private banks may have higher threshold)


What is CD?

CD means “certificate of deposit.” CD is a financial instrument allowing the holders of CD to earn interest at a higher rate compared to other similar alternatives available in the market. In simple terms, a CD is a certificate issued by a financial institution usually a bank to a person or an entity indicating the amount of money being deposited, rate of interest, a period of investment, and maturity value.

CD being offered is regulated by the financial supervisory authority of the country. For example, in India, the RBI regulates the issuance of CD. As per the rules, not all financial institutions may offer CD and there may be certain conditions on the purchase.

CD is considered less risky compared to other high earning instruments such as shares, debentures.CD places a restriction on the depositor not allowing to withdraw the funds until a certain maturity date has arrived. This maturity date could be a certain number of days or months or even years.

Ideally, financial institutions may provide fairly high rate interest on short term CDs but this practice could vary from institution to institution and some may even offer high rates for long term CDs. Premature withdrawal of CD will attract a penalty.


What are Savings?

Savings means a bank account wherein people deposit money and withdraw as per their needs subject to bank and legal limits. Savings is a concept prevalent since ancient times and people were tuned to increasing their wealth by depositing their money in Savings.

Savings is especially fundamental to those who are looking for the availability of emergency funds at any time. A savings account doesn’t charge any penalty for premature withdrawal. Savings also offer a decent interest rate with other facilities like the transfer of funds, ATMs, etc. being offered.

Savings may come with banks placing certain conditions or restrictions. This could mean limiting the number/amount of withdrawal in a particular period. Some conditions can be relaxed based on the application of certain bank charges. The government of a country may restrict withdrawals in case of certain events for example bankruptcy of a bank, or for example in India the case of demonetization in 2016.

In modern times, certain financial institutions provide Savings accounts that offer high rates of interest. The rate in some cases may even come close to what other financial instruments offer. Some Savings accounts may also offer flexibility for instant transfer to a fixed deposit account on the amount of money reaching a set threshold.

By providing these dynamic features, certain of the disadvantages associated with the Savings have been eliminated.

Main Differences Between CD and Savings

  1. CD provides a high-interest rate on the money deposited. Savings provide less interest on the money deposited.
  2. CD does not provide instant liquidity on the funds deposited. Savings provides instant withdrawal.
  3. CD may have premature withdrawal charges levied. Savings will not have any premature withdrawal charges.
  4. CD is ideally preferred by people who want to keep a certain lump sum amount of money to earn a high-interest rate. Savings are usually preferred by working-class people who have needs of instant liquidity.
  5. CD may help the creation of a future corpus for education or purchasing any substantial assets. Savings may not help generate a significant corpus as there will be continuous withdrawals since there are no premature withdrawal charges.
  6. CD will not offer withdrawal through ATM unless first the maturity proceeds have been transferred to Savings. Savings offer the facility of ATM withdrawals.



CD and Savings are quite indistinguishable from a financial standpoint as they serve the same purpose (i.e. enabling the growth of money) but the way they enable the increase and the amount of increase is very distinct. Again, both offer multiple but distinct sets of benefits and come with certain cons.

Therefore, it is important to assess these aspects and also the individual needs before deciding to adopt either CD or Savings. A prudent option would be to look for hybrid offerings that allow for both CD and Savings. This can enable taking the best of both financial products and achieving better wealth generation and financial economies.

A thorough practical understanding and advice, especially from financial specialists, is suggested to reap the full benefits of either the CD or Savings option.



  1. https://cloudfront.escholarship.org/dist/prd/content/qt0g8533g7/qt0g8533g7.pdf
  2. https://ajph.aphapublications.org/doi/abs/10.2105/ajph.2007.129353
  3. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2254565/?log$=activity