Bank deposit: the most familiar and simple way to “lock away” money at the bank

A bank deposit is a simple and solid way to save money for a defined period and receive an interest rate known in advance. This page explains how deposits work, the available types, their advantages and disadvantages, and how to compare interest rates, savings periods, and exit terms offered by banks.

Reading time: 9 minutes
Last updated: July 2026

A bank deposit is the “older brother” of the solid-savings world. It is a simple and common product in which you “lend” the bank a sum of money for a period defined in advance (such as 3 months, a year, or more), and in return the bank pays you interest.

Who might a bank deposit suit?

Peace of mind and certainty	A safe alternative to a current account	Short-term money management
Someone seeking complete peace of mind and precise knowledge of how much money will be waiting at the end.	Someone who wants a safe and simple alternative to leaving the money in a current account.	Managing money for the short term when the principal must not be put at risk.

Table—advantages and disadvantages of a bank deposit

Aspect	Advantage	Disadvantage
Risk level	Very low	No compensation for inflation
Return	Fixed/defined in advance	Interest is usually low
Liquidity	Low (depends on exit points)	The money is not liquid during the deposit period
Tax	15% on the nominal profit	The tax rate remains the same (15%) regardless of inflationary erosion
Management	Easy	May encourage passivity

Frequently asked questions

Security and profitability: Is my money safe in a bank deposit?

Yes. It is one of the most solid products, because it is a direct obligation by the bank to return your money. The risk is considered zero.

Does the deposit really “earn”?

Not always. The number in the account will indeed grow, but if product prices (inflation) rose faster than the interest you received, your purchasing power was actually eroded. In that case, the profit is only “on paper.”

Do you pay tax on a bank deposit?

Yes. A 15% tax on the interest.

It is important to know: The tax is nominal. That is, the state collects tax on the monetary profit you received, even if the value of the money was actually eroded because of inflation.

A short example:

If NIS 10,000 was deposited for one year at an interest rate of 3%, the amount at the end of the year will be NIS 10,300.

The interest is NIS 300, and a 15% tax is paid on it—meaning NIS 45.

The tax is paid even if product prices rose in that year, and for the purpose of the example by 4%, so that in practice the money buys fewer products than could have been bought at the beginning of the year.

Types of deposits and differences: What is the difference between a bank deposit and a savings plan?

Deposit: Usually a one-time sum for a defined period, with a fixed interest rate in advance.
Savings plan: Usually ongoing savings with monthly deposits, changing terms, and less flexibility.

What is the difference between a short deposit and a long deposit?

Short deposit: A period of weeks or months.
Long deposit: One year or more.

The longer the deposit, the interest may be higher and the flexibility lower.

Fixed interest versus index-linked—which is preferable?

Fixed interest: You know exactly how much you will receive at the end. Suitable when inflation is low.
Index-linked: Your money is “updated” according to the cost of living. A track intended to protect you from surprising price increases.

Can the interest on a deposit change during the period?

In a fixed-interest deposit—no.
In a variable-interest deposit—yes, according to the mechanism determined in advance (for example, a change based on the Bank of Israel interest rate or at set points in time).

What is a daily deposit (Pakam Yomi (פק״מ יומי))?

It is a “half deposit.” The interest is very low, but the money is liquid and can be withdrawn almost every day. A good solution for someone who wants to earn something small on money that needs to remain available.

Is a deposit suitable for any sum of money?

Deposits can suit both small and large sums, but the larger the sum—the greater the effect that erosion, tax, and terms have on the actual result.

Is a deposit considered an investment?

Usually not. A deposit is considered a very solid savings tool intended for relatively preserving the money and managing liquidity (the availability of the money for use)—not for generating a return.

Managing the deposit: How can a bank deposit be opened?

Easily: On the bank’s website or app, in a telephone call with the bank, or in a meeting with a clerk at the branch. The options and convenience vary from bank to bank, and sometimes among different types of deposits.

What happens if I need the money early?

In most cases, you will be able to withdraw it, but you will pay a “penalty”—the bank will significantly reduce the interest promised to you.

Tip: If you are not sure about the date, it is preferable to split the money into several deposits with different exit points.

Can money be split among several deposits?

Yes. You can open several deposits for different amounts and periods. This way, some of the money becomes available earlier, while another part is locked for a longer period.

Please note: This is a way to manage liquidity (the availability of the money for use)—not to increase profit.

Can you negotiate the interest rate with the bank?

Absolutely! The interest rate shown on the website or app is the starting point. The larger the sum, or if you present a better offer from a competing bank, the greater your chance of improving the terms. Further down the page, you can see the interest-rate comparison table.

Do all banks offer the same terms?

Not at all. There are significant differences among the banks. It is always worth comparing (interest rates, periods, linkages, and exit terms) before locking the money.

Why does the bank want me to open a deposit so much?

Your money is raw material for the bank. It uses it to give more expensive loans to other customers.

In return, the bank pays interest to those who deposited the money.

Bank deposit: the most familiar and simple way to “lock away” money at the bank

Who might a bank deposit suit?

The advantages: why yes?

The disadvantages: what is the price?

Table—advantages and disadvantages of a bank deposit

The bottom line

Compare and choose correctly

Frequently asked questions

In summary