What is a term deposit?

A term deposit is a savings product where you lock your money at a financial institution for a fixed period — typically 3 months to 5 years — at a fixed interest rate. In the US, the most common term deposit is a Certificate of Deposit (CD). The rate is guaranteed for the term. Early withdrawal typically incurs a penalty (usually 90–180 days of interest). Term deposits offer higher rates than demand deposits in exchange for reduced liquidity.

What is a call deposit?

A call deposit (also called a demand deposit or call account) allows you to earn interest on your balance while retaining the right to withdraw on demand or with very short notice. In the US, call deposits correspond to: regular savings accounts, high-yield savings accounts (HYSA), and money market accounts. You can access funds at any time (though savings accounts have historically limited withdrawals to 6 per month under Regulation D — this was suspended in 2020 but some banks still enforce limits).

Which pays more interest — term deposit or call deposit?

Term deposits (CDs) typically pay more than call deposits (savings accounts) because they offer the bank a guaranteed period of deposit. In 2026: best 1-year CD rates are approximately 4.50–4.75% APY; best HYSA rates are approximately 4.35–4.75% APY. The gap has narrowed considerably since 2022. The trade-off is liquidity: a CD locks funds; a HYSA does not. For many savers in 2026, a top HYSA is nearly as competitive as a CD with full liquidity.

What is the US equivalent of a term deposit?

In the US, the equivalent of a term deposit is a Certificate of Deposit (CD). CDs are sold by banks, credit unions, and some brokerages (brokered CDs). Terms range from 3 months to 10 years. The US does not commonly use the term 'term deposit' — that terminology is more common in the UK, Australia, and Canada. All three (CDs, term deposits, GICs in Canada) are the same basic product: fixed rate, fixed term, penalty for early withdrawal.

When should I choose a term deposit over a call deposit?

Choose a term deposit (CD) when: you know you won't need the money for the CD's term; you want to lock in today's rate because you expect rates to fall; the CD rate meaningfully exceeds the best HYSA rate. Choose a call deposit (HYSA) when: you might need the money before the term ends; rates are expected to rise (you'd miss out locked in a CD); the HYSA rate is competitive with CD rates (as it is in 2026).

Term Deposit vs Call Deposit — Key Differences Explained 2026

Term Deposit vs Call Deposit — What’s the Difference?

The two fundamental types of bank deposit products:

Term deposit: Locked for a fixed period, fixed rate, penalty for early withdrawal (US: CD)
Call deposit: Interest-bearing but accessible on demand (US: savings account, HYSA, MMA)

Side-by-Side Comparison

Feature	Term Deposit (US: CD)	Call Deposit (US: HYSA / Savings)
Access to funds	Fixed term (locked)	On demand
Interest rate	Fixed for the term	Variable (changes with Fed rate)
Rate level	Typically higher	Competitive (close to CDs in 2026)
Early withdrawal	Penalty (90–180 days interest)	None
FDIC insured	Yes, up to $250,000	Yes, up to $250,000
Best for	Known future needs, locking in rates	Emergency funds, short-term savings
US product name	Certificate of Deposit (CD)	HYSA, savings account, MMA

Term Deposits (CDs) Explained

A CD locks your deposit at a bank or credit union for a set term:

How it works:

You deposit funds for a specified term (e.g., 12 months)
The bank pays a fixed APY for that term
At maturity, you receive principal plus interest
Early withdrawal: penalty, typically 90–180 days of interest

2026 CD rates:

3-month CD: 4.0–4.3% APY
6-month CD: 4.2–4.5% APY
12-month CD: 4.4–4.75% APY
2-year CD: 3.8–4.2% APY
5-year CD: 3.5–4.0% APY

The yield curve in 2026 is relatively flat — short-term CDs often pay as much as long-term CDs, making 6–12 month CDs the sweet spot for most investors.

Call Deposits (HYSAs) Explained

How it works:

You deposit funds — no commitment to a term
The bank pays a variable APY that changes with the Fed funds rate
You can withdraw at any time with no penalty
Rate adjusts when the Fed raises or cuts rates

2026 HYSA rates: 4.35–4.75% APY at leading online banks (SoFi, Marcus, Ally, LendingClub, UFB Direct)

The Regulation D consideration: Federal Regulation D historically limited savings account withdrawals to 6 per month. The Fed suspended this limit in April 2020 during COVID, and has not reinstated it. However, some banks still impose a 6-per-month limit. Check your bank’s policy before relying on an HYSA for frequent transactions.

Which Is Better in 2026?

Current rate comparison: Leading HYSA rates (4.75%) are competitive with or equal to 12-month CD rates (4.75%). This makes the choice primarily about your liquidity needs:

Choose a CD if:

You’re certain you won’t need the money for 12+ months
You believe rates will fall (lock in today’s rate)
The CD rate materially exceeds the HYSA rate

Choose an HYSA if:

You might need the money before the CD matures
You’re uncertain about rate direction
The HYSA rate is within 0.25% of the CD rate (as it often is in 2026)

CD ladder strategy: Split funds across multiple CDs (3-month, 6-month, 12-month, 18-month) so a portion matures regularly. Captures high rates while maintaining periodic access.

Average Rates for Deposit Accounts — current rate tables
Low-Risk Ways to Earn Higher Interest — HYSA, CDs, T-bills comparison
Why Now Is Still a Good Time to Grow Your Money — rate environment
Banking Basics Hub — complete banking guide

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy