What is the difference between flexible fixed-term deposits and daily savings accounts?

A fixed-term deposit account is used to invest money for a specified period of time at a fixed interest rate. You can access a daily savings account at any time.

Would you like to securely invest your savings? Under the German deposit guarantee scheme, deposits of up to 100,000 euros per person and per bank are protected. This makes fixed-term deposits and instant access savings accounts a popular option for savers who value high security and predictable returns.

In this article, we will answer the most frequently asked questions about the differences between a current account, daily savings account and a flexible fixed-term deposit account, while also sharing some practical tips on opening and managing a flexible fixed-term deposit account.

Difference from a current account

Unlike a current account, flexible fixed-term deposits and daily savings accounts are only intended for investing money and do not permit daily banking transactions such as transfers or card payments.

Another important difference is the interest rate on a flexible fixed-term deposit account and the interest rate on a daily savings account: Only a few banks offer interest on current account balances. Both flexible fixed-term deposits and daily savings accounts, however, are a secure way to benefit from interest.

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Differences between a daily savings account and a flexible fixed-term deposit account

A flexible fixed-term deposit account offers a fixed term – usually between 3 and 60 months – in contrast to a daily savings account where you can access your money at any time. Over the term of a fixed deposit, the money is not available or only available under certain conditions. With regard to flexible fixed-term deposit accounts, banks usually offer higher interest rates than for daily savings accounts because the capital is tied up for a specific period of time.

Another difference is the fixed interest rate: While interest rates on daily savings accounts can fluctuate, they remain constant for the entire term of a flexible fixed-term deposit account. This enables reliable planning of earnings.

Advantages of a flexible fixed-term deposit account

There are numerous advantages to a flexible fixed-term deposit account:

  • Attractive interest rates: Because the capital is tied up for a fixed term, the interest rates are often higher than with overnight money.
  • High interest rates: Under statutory deposit protection, deposits of up to €100,000 are protected.
  • Predictable returns: Since the interest rate is fixed for the entire term, you know exactly how much you will earn at the end.
  • Easy to manage: It is convenient to open and manage a flexible fixed-term deposit account online.

 

Terms and interest rates

Flexible fixed-term deposit accounts offer different terms, which are usually between 3 months and 5 years. A popular option is a 12-month investment period since this offers a good compromise between availability and returns. Current interest rates will vary depending on the bank and market situation. 

BBVA’s flexible fixed-term deposit account has a term of 24 months from the date upon which the contract is signed, but can be terminated early free-of-charge.

Minimum and maximum deposit

Most banks set a minimum deposit for flexible fixed-term deposit accounts, which is often €1,000. Depending on the bank, there are different upper limits, which are usually in the range of several hundred thousand euros. At BBVA, you can deposit a minimum amount of €500 up to a maximum amount of €1,000,000 into a flexible fixed-term deposit.

What happens at the end of the term?

At the end of the term, the invested capital plus interest will either be automatically paid out to your reference account or transferred to a new fixed-term deposit account. At BBVA, you will receive the deposited amount plus accrued interest in your BBVA current account at the end of the term. A flexible fixed-term deposit account is not automatically extended.

Is it possible to terminate them early?

In principle, a fixed-term deposit account is tied to the term that has been agreed term; early termination is usually not possible. Some banks, such as BBVA, offer flexible options that allow early termination under specific conditions. If you need to access to your money sooner, you can terminate BBVA's flexible fixed-term deposit account early and receive a reduced interest rate of 1% p.a.

The flexible fixed-term deposit account from BBVA

Flexible fixed-term deposits offer an attractive way to invest your money safely and profitably.

  • Term: 24 months
  • Minimum investment: €500
  • Maximum investment: €1,000,000
  • Interest rate: 2% interest p.a. if the term of the account is maintained
  • Early availability: Possible, but with a reduced interest rate of 1% p.a.
  • No account management fees

To use the flexible fixed-term deposit account, you will need a free BBVA current account, which is managed completely online. At the end of the term of the fixed-term deposit account or in the event of early termination, the capital and interest will be automatically transferred to your BBVA current account.

 

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