If you have a large sum of money available, then you may be considering various alternatives to invest them for good returns. Some of the safest ways to go about these can either be through fixed or demand deposits. Each of them has its own set of benefits and disadvantages that can cater to your varied requirements. 


For instance, these could differ in terms of liquidity, accessibility, earnable interest, and more. Read on to learn more about demand deposit vs fixed deposits and their differences below.

Fixed Deposits

Fixed Deposits, also known as term or time deposits, are funds deposited for a set period of time and can range from a few days to several years. You earn interest at a predetermined rate for the chosen tenor. 


Funds deposited in FDs tend to feature higher interest than savings accounts, and those with longer tenors usually have higher interest rates.


On maturity, you will be given the choice of either withdrawing the deposit amount along with interest or starting another FD cycle with the same funds.

Demand Deposits

Compared to fixed deposits, demand deposits tend to provide much more ease of access and liquidity, but give lower interest rates and charge various account handling fees. One major benefit of such deposits is that you can freely withdraw funds without any prior notice or penalties.


Some examples of demand deposit accounts are savings accounts, money market accounts and checking accounts, among others.

Differences Between Fixed Deposit and Demand Deposit

Here are the major distinguishing factors between fixed deposits and demand deposits:


Fixed Deposits

Demand Deposits


These are accounts in which deposits are held for a set period of time at a predetermined rate of interest

These are accounts through which you can withdraw funds at any point of time, without any prior application or notice


Help provide a secure way of growing funds over a fixed period of time

Ideal for those who wish to have steady access to their money for different financial activities

Interest Rates

Tend to offer higher interest rates compared to demand deposits

Offers lower interest rates in exchange for liquidity

Cheque Utility

Not allowed



Can range from 7 day to 10 years

No such requirements as deposits are available for regular use


Regular FD, senior citizens FD, Tax saving FD, Corporate FD and more. 

Savings accounts, checking accounts and money market accounts


Tax saving FDs can help save taxes up to ₹1.5 Lakhs under Section 80C of the Income Tax Act, 1961

No taxes applicable on DDs


Low liquidity as funds are usually locked in for a specified period of time, but can be prematurely or partially withdrawn with certain penalties 

Highly liquid with no penalties or charges incurred


Usually not flexible due to fixed tenor 

Highly flexible as funds can be added or withdrawn anytime

What is better - Demat deposit or Fixed Deposit?

The choice between a fixed deposit and demand deposit depends mostly on your financial objectives and liquidity requirements.


While demand deposits offer easy access to funds but lower interest rates, fixed deposits offer comparatively higher interest rates but limited access to your funds. Fixed deposits lock in your funds for a fixed term. However, you can make premature withdrawals in the case of FDs by paying a penalty. 


Hence, it would be wise to consider your goals and risk tolerance to determine which is better for you.


Now that you have a much better understanding of demand deposits vs fixed deposits, you could use the same to help you make better investing decisions based on your financial requirements. Don’t wait any further and get started with opening an account of your preference!


The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort. 

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products. 

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