Deposits and high-yield accounts
These are the two simplest and safest ways to make your idle money generate some return. They are not high-risk investments: they are savings products, designed for money you want to keep available or nearly available.
The fixed-term deposit
In a fixed-term deposit you hand an amount to the bank for an agreed period (say 12 months) and, in return, the bank pays you interest known in advance. The trade-off is liquidity: the money is "locked up" for that term.
Liquidity: how easily something can be turned into available cash without losses. A current account is very liquid; a fixed-term deposit less so, because cancelling early can cost you interest.
Example: €10,000 in a deposit at 3 % TAE for 12 months generates about €300 gross of interest at maturity.
The high-yield account
A high-yield account is an account (current or savings) that pays interest on the balance you keep, usually credited monthly. Its big advantage over the deposit is full liquidity: you can withdraw the money whenever you want. In exchange, the rate is usually variable (the bank can change it) and sometimes requires conditions (direct-deposit your salary, bills…) or caps the rewarded balance.
The TAE: the figure that compares
For both deposits and accounts, the figure to look at when comparing is the TAE (annual equivalent rate), which reflects the real annual yield including how often interest is paid. Beware of short terms advertised with a TAE: a "5 % TAE for 3 months" is not 5 % in your pocket, but roughly a quarter of that, because the TAE is annualized.
Safety: the Deposit Guarantee Fund
Both deposits and account balances at a bank are covered by the Deposit Guarantee Fund (FGD), which guarantees up to €100,000 per holder and institution if the bank fails. That is why they are low-risk products.
Tip: if you have more than €100,000, splitting it across several banks (each with its own guarantee) keeps all the money covered.
How interest is taxed
Interest is investment income and is taxed in the savings base (19 % to 30 % in 2026). In addition, the bank withholds 19 % when it pays you, as an advance on income tax.
Of the €300 in the example, the bank would pay about €57 (19 %) to the tax authority and credit you €243; the final adjustment is made on your return.
Common mistakes
- Comparing by TIN instead of TAE. Two deposits "at 3 %" pay differently depending on whether interest is paid at maturity or monthly. The TAE levels the field.
- Being dazzled by a 3-month TAE. A "5 % TAE over 3 months" leaves roughly 1.25 % of the principal in your pocket, not 5 %.
- Cashing out a deposit early. Many penalise you with part or all of the interest; read the early-cancellation clause before signing.
- Trusting your balance to a non-EU bank assuming the Spanish FGD covers it. The guarantee is the one of the country where the entity is based.
What to do
If you won't touch the money for a known period, the deposit usually pays a bit more; if you want access at any moment, the high-yield account. Above €100,000 per entity, spread it across several banks to stay under the FGD umbrella. And before signing anything, confirm where the entity is based and its deposit-guarantee membership number.
This is educational information, not financial advice. Conditions and taxation can change; read the fine print and official sources.