Savings accounts are accounts maintained by retail financial institutions that pay interest but cannot be used directly as money (for example, by writing a check). These accounts let customers set aside a portion of their liquid assets while earning a monetary return. For the bank, money in a savings account may not be callable immediately and therefore often does not incur a reserve requirement freeing up cash from the bank's vault to be lent out with interest.
A Fixed rate bond is a type of debt instrument bond with a fixed coupon (interest) rate, as opposed to a floating rate note. A fixed rate bond is a long term debt paper that carries a predetermined interest rate. The interest rate is known as coupon rate and interest is payable at specified dates before bond maturity. Due to its fixed nature, the fixed-rate bond is not susceptible to fluctuations in interest rates, and is therefore viewed as a security that does not possess a significant amount of interest rate risk. That being said, the fixed-rate bond, although a conservative investment, is highly susceptible to a loss in value due to inflation. The fixed-rate bond’s long maturity schedule and predetermined coupon rate offers an investor a solidified return, while leaving the individual exposed to a rise in the consumer price index and overall decrease in their purchasing power.
Bonds generally provide higher rates of interest than other bank accounts, so fixed rate bond accounts are ideal for people who have spare money that they can afford to lock away for a fixed period of time.
There are a number of factors that you need to be aware of before choosing your account, for example, some accounts offer interest that it adds onto your balance monthly, which then accumulates more interest throughout the year based on the total balance. Other accounts pay the interest owed when the term ends, or pay the interest into a separate savings account on a monthly basis, so you will only be paid interest on the opening balance.
Purchasing a fixed rate bond is knowing, from the very start, what to expect out of the investment. As such, beginners in the investment world, as well as more experienced but conservative ones see this as a good and stable option. Those who are not very well-versed in investments also stand to benefit, because it no longer becomes necessary to monitor every single change in the economy that have a detrimental effect to the expected return of the bond.
Text from Wikipedia