The trade
An instant-access savings account pays a variable rate that the bank can change at any time, and lets you withdraw at any time. A fixed-term deposit pays a rate agreed today for a fixed period, from one month to five years or more, and either forbids withdrawal before the end or allows it with a penalty. The bank pays more for the term because it can lend the money out with certainty; you accept less flexibility for the extra.
What the gap is really about
A fixed rate is a bet on the direction of rates. If the European Central Bank cuts, the variable rate on your instant-access account falls within weeks while the fixed rate on your deposit does not; the deposit wins. If the ECB raises, the instant-access rate climbs and the deposit is stuck; the account wins. Banks price this in. When markets expect cuts, one-year deposits may pay less than instant access, which looks odd until you realise the bank expects the instant-access rate to fall below it soon. Compare the deposit rate not with today's instant-access rate but with what you expect that rate to average over the term.
Early withdrawal
Read the penalty clause before the rate. Some deposits cannot be broken at all except on death or hardship. Most can, at a cost: forfeiting some or all of the interest earned, or a fee expressed as a number of months' interest. On a three-year deposit broken after one year, losing six months of interest turns a good rate into a poor one. The right term is the one you are certain you can leave alone; a shorter term at a slightly lower rate beats a longer one you have to break.
Laddering
Splitting the money into several deposits with staggered end dates, a one-year, a two-year and a three-year, gives you some of the higher long rates while one part matures every year. When a deposit matures you either spend it or reinvest it at the long end of the ladder. Over time the whole sum earns close to the long-term rate while a third of it is never more than a year away. It is the standard answer to the question of which term to choose when you do not know.
What is the same
Both are deposits, covered by the deposit guarantee up to €100,000 per depositor per bank. Both pay interest that is taxed as capital income in your country. Both are available from banks in other EU countries under the single licence. And on both, the effective annual rate, which includes when and how often interest is paid, is the figure to compare, not the headline rate; a deposit paying interest only at the end of three years compounds less than one that credits it yearly.
In practice
Keep an emergency fund of a few months' expenses in instant access, always. Put money you will not touch for a known period into a deposit whose term matches that period, or into a ladder if the period is uncertain. Compare on effective annual rate and on the penalty clause. And treat a fixed rate for what it is: a good deal when rates fall, a mediocre one when they rise, and a certain one either way.
