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Which statement correctly differentiates a fixed deposit from a savings account?

medium Q7 of 15
Banking Awareness - Types Of Bank Accounts
Which statement correctly differentiates a fixed deposit from a savings account?
ASavings accounts have fixed tenure
BFixed deposits allow unlimited withdrawals
CFixed deposits offer higher interest with limited liquidity
DSavings accounts lock funds for a fixed period
Step-by-Step Solution

  1. Step 1: Compare liquidity.

    Savings accounts allow easy withdrawals.

  2. Step 2: Identify FD advantage.

    FD offers higher interest but restricts liquidity.

  3. Final Answer:

    Fixed deposits offer higher interest with limited liquidity → Option C

  4. Quick Check:

    Higher return but locked funds = FD Account ✅
Quick Trick: FD trades liquidity for higher interest.
Common Mistakes:
  • Thinking savings and FD have similar withdrawal rules.
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