Call Deposit vs. Time Deposit: What’s the Difference?

What Is a Call Deposit?

A call deposit account generally earns a higher interest rate than a traditional checking or savings account in exchange for meeting a higher minimum balance requirement, such as $3,000. Some banks use tiered rates, meaning your account earns a higher rate once your balance reaches certain thresholds.

Unlike a time deposit account, a call deposit allows you to withdraw as much money as often as you like without penalty, provided you maintain the required minimum balance. These accounts also have no set term, so there's no maturity date when you can access your funds. But if your balance drops below the required threshold, you may face fees or penalties.

Learn more: Common Bank Fees and How to Avoid Them

What Is a Time Deposit?

Time deposit accounts are more commonly referred to as certificates of deposit (CDs), and some credit unions call them share certificates. These accounts require you to keep your money in the account for a fixed period ranging from one month to five years or more. In return, the bank typically offers a higher interest rate than a regular savings account that is guaranteed for the CD's term.

While CDs help you earn more, the downside is that you lose access to your money. You generally can't withdraw funds during the term without paying an early withdrawal penalty. Fees can range from seven to 540 days of lost interest, depending on the financial institution, the account's term length and when you make the withdrawal.

However, some time deposit accounts may give you more flexibility. For example, bump-up CDs allow you to raise your rate one time during its term if the bank's rate increases. Another option is liquid CDs, which let you withdraw money from your account without a penalty, albeit at a lower rate than other CDs.

Tip: Both call deposits and time deposits can be a reliable savings option because they are insured by the Federal Deposit Insurance Corp. (FDIC) for up to $250,000 per depositor, per institution and account category.

Should You Get a Call Deposit or a Time Deposit?

Whether a call deposit or time deposit account is the better fit for you likely depends on how much flexibility you want and when you might need your money. And you may find neither of these options is what you're seeking in a deposit account. Here are some common scenarios when a time deposit or call deposit might make sense.

When to Get a Time Deposit

• You're saving for a future goal. If you know when you'll need the money, a time deposit account can help you grow your savings over that specific period. For example, if you plan to buy a home in three years, putting your down payment savings in a three-year CD can help you grow the balance until you're ready to buy a house.
• You prefer low-risk investments. A CD can be a smart savings choice if you're averse to risk, since it offers a guaranteed rate of return. This time deposit account is generally a lower-risk option compared to putting your money in stocks, bonds and other more volatile options.
• You're not concerned with liquidity. If you already have substantial savings and a fully funded emergency account, you may just want a safe place to park your money and earn a good annual percentage yield (APY) on it. Since you already have money you can quickly access if you need to, locking up funds for a while isn't as big of a sacrifice.
• You want a greater return on your savings. As mentioned, time deposits usually offer better rates than standard savings accounts. For example, the national average savings account interest rate was 0.41% APY, while the average three-year CD offered 1.35% APY, as of April 2025. However, top three-year CDs offered rates up to 4.15% APY during the same time period, a significantly higher return if you're able to lock your funds for the term.

Learn more: Top Strategies for CD Savers

When to Get a Call Deposit

• You're building an emergency fund. With greater access to your money, a call deposit account is a convenient and secure place to grow your emergency fund. Not only will you earn a higher rate on your deposit, you can pull funds quickly if an unexpected expense arises.
• Your short-term needs are uncertain. If your timeline and needs are unclear, a call deposit account can help you earn a good interest rate until you decide how you want to use your money. For example, maybe you're not sure if you want to use funds for a home renovation, a business venture or to pay down debt, you can earn a higher interest rate on your cash until you're more sure about your plans.
• You want savings that works like a checking account. If you want your savings to be easily accessible for everyday needs, a call deposit account could give you the benefits of a checking account, including ATM access, unlimited withdrawals and mobile banking. Some banks even allow you to deposit funds in other currencies.

Learn more: How Much Money Should You Save Each Month?

The Bottom Line

If you're deciding whether to save your money in a time deposit or a call deposit account, the right choice may come down to which one offers a better return and how soon you might need your money. Both are low-risk investments that can provide a good return on your savings, but ask yourself how each one fits into your overall financial plan to help you decide.

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