The main characteristic of such a deposit is complete access to funds. The depositor has the right to withdraw money in full or in part at any time without losing accrued interest, since they do not commit to any time period.
The price for this freedom is a low interest rate: the bank cannot rely on these funds when planning and therefore offers minimal returns. As a rule, it is significantly below inflation, meaning real returns are negative.
Hence its practical purpose: such a deposit is suitable for reserves for unexpected expenses and for funds whose usage timeline is unknown, but not for savings. Keeping money that will definitely not be needed within the next year is a direct loss of income.
A reasonable approach for most cases is diversification. The reserve remains accessible, while funds with a defined horizon are placed in term instruments. Deposit protection extends to both types equally.