The names sound alike but the jobs differ. Why choosing on the headline rate alone loses money.
A term deposit takes a lump sum up front and holds it to maturity. A savings plan takes a fixed amount each month and pays out a lump sum at the end. Money already in hand goes to a deposit; money you will accumulate from now goes to a plan. The question is not which is better, but what state your money is in today.
Because you pay in monthly, only the first month's money earns twelve months of interest and the last month's earns one. A 5% annual savings plan therefore pays roughly what a 2.7% deposit on the same total would. Judging by the headline rate alone leads to disappointment.
15.4% tax comes off the interest, so what you receive is less than advertised. High-rate products often require card spending or salary transfer. Miss the conditions and you get only the base rate โ check that they fit your life before signing.
Breaking before maturity replaces the agreed rate with a very low early-withdrawal rate. Only commit money you can surely leave until the end, and keep an emergency fund separately. Splitting into several plans with staggered terms means you break only one if you must.
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