Difference Between CD and Saving Account (With Table)

Certificate of Deposit (CD) and the Saving account both are the money market instruments that represent some amount of money is deposited in the bank for which the bank is giving interest to the depositor.

Certificate of Deposit vs Saving Account

The main difference between the two is that a saving account provides liquidity to the money deposited in the account. In other words, we can say that the amount which is deposited in the saving account can be withdrawn at any time but it is not the case with a certificate of deposit. In case of certificate of deposit the funds can’t be withdrawn before a fixed time of interval without taking a penalty of 2 years.

A Saving account is an account which can be opened in any bank or financial institution on which it has to pay the interest and also this account is working as a protector of money that different people deposited in it.

A Certificate of deposit(CD) is a deposited paper which is issued to the depositor after the deposits some amount of money in the bank or any other financial institution for a fixed time of interval.

Comparison Table between CD and Saving Account


Certificate of Deposit

Saving Account


It is a paper issued to the depositor against the amount of money deposited.

It is an account in which the money is deposited.

Interest rate

The interest rate is higher than that in saving account.

The interest rate is lower than that of the certificate of deposit.


No liquidity of money.

The liquidity of money is present.

Time interval

It is fixed before depositing the amount.

It is variable as per the customer’s choice.


The penalty is imposed on withdrawal before a fixed time interval.

No penalty is imposed on any withdrawal at any time.

What is a Certificate of Deposit (CD)?

A certificate of deposit is a kind of account that is issued to the depositor in the dematerialized form against the amount of money deposited in any financial institution for a fixed interval of time which is a minimum of 6 months and can go up to a maximum of 5 years. The customer can’t withdraw the funds from the account before completing the time which is decided earlier. Otherwise, he has to pay the imposed penalty by the bank. The interest rates on which it is issued are higher than normal interest rates and they are fixed in nature, they remain unchanged even if the rates are variable at that time in the market.

There are twelve types of certificate of deposit which are listed below:

  1. Traditional CD
  2. Bump-up CD
  3. Step-up CD
  4. Liquid CD
  5. Zero-coupon CD
  6. Callable CD
  7. Brokered CD
  8. High-yield CD
  9. Jumbo CD
  10.  IRA CD
  11.  Add-on CD
  12.  Foreign currency CD

These are all the different types of the CD having different types of features which can be used for different purposes and choices accordingly.

What is Saving Account?

It is an account that is used for providing protection to our earned money under the security of the bank by depositing it. By this, some amount of interest can also be earned from the bank at the rate which is available in the market. It acts as a wallet which also helps to hold the money into it. They are used to fulfill our short-term needs such as paying bills, making recharges, transferring money, making investments, and many more. This account also provides a lot of facilities such as debit cards, cheques, internet banking, and many more.

The main drawbacks of saving accounts are limited no of withdrawals, limited no of transactions, and monthly withdrawal limit due to which the UPI payments are rising at a fast rate.

Main Differences Between Certificate of Deposit (CD) and Saving Account

  1. Both are the money market instruments representing some amount is deposited in the financial institution but CD is in dematerialized form.
  2. Certificate of deposit is issued at a higher rate of interest than that of a Savings account for a fixed time of interval. On the other hand, the time interval is not fixed in case of a savings account.
  3. We can’t withdraw any amount of money in CD whereas it is possible in a saving account.
  4. The penalty is imposed if money is withdrawn from CD whereas it is not the rule in the saving account.
  5. Amount in CD can’t be used for routine transactions whereas the amount present in a saving account can be used anytime.
  6. No extra facilities are given in case of CD-like debit cards, cheques and other facilities which are provided in case of saving account.
  7. The amount in savings can also be used for investment purposes but it is not the case with a certificate of deposit.


This is all about the details about the Certificate of deposit and the saving account with their complete differences. This article also contains a comparison table which helps in getting better clarity of the differences between the two in different parameters. Also, the benefits and drawbacks of both accounts are also mentioned in this article. Different types of certificates of deposit are also mentioned.

In my opinion Certificate of deposit is better because we remain cautious of spending the money on various things when there is no liquidity in the funds which are deposited in the bank. At the same time the interest rate is also higher and we remain under shield if interest rates go down.

One major point which should be noted here is that the security of money is more in the case of a certificate of deposit because for fulfilling any need in today’s life we use UPI payment platforms that are linked to the saving account. They are at risk due to which we don’t keep the high amounts of money in the savings account and also there is no barrier between us and spending of the money.


  1. https://www.proquest.com/openview/cdc24cd403fed3d5910cbe7fe12ee5dd/1?pq-origsite=gscholar&cbl=2032143
  2. https://www.aeaweb.org/articles?id=10.1257/app.20160547