Low-interest rates translate into much less favorable bank deposit offers. Finding a favorable bank deposit that will bring real profits requires selecting attractive offers on the banking market. It is also important to answer the question of whether the deposit is the best way to allocate capital.
A bank deposit is undoubtedly one of the safest ways to get a profit from your savings. This is due to the security of funds held in banks through the Guaranteed Benefit Fund. However, a bank deposit is not always able to provide a satisfactory profit in relation to even safe savings accounts.
When selecting bank deposits, it is necessary to adjust the offers to the needs and expectations. It is important to take into account, inter alia, the duration of the deposit and the time of freezing the cash as part of a bank deposit. Most of the deposits when closing them before the deadline do not allow to provide interest profits.
Long-term or short-term deposit?
Bank deposits can be generally divided into short-term and long-term deposits in terms of the duration of the contract. Short-term deposits are monthly, three-month and annual deposits. Short-term deposits often allow for higher profits as part of promotional offers. However, deposits with longer savings require regular renewal. Then the terms of the agreement change and the interest rate may not be so favorable anymore.
Long-term term deposits are a solution for people who can freeze funds for a longer period of time. Long-term deposits can be beneficial especially for large sums of money, where you can benefit from individual conditions offered by banks or from rented deposits.
Type of deposit interest
Deposits also differ in the type of interest. Most often you can find deposit offers with a fixed interest rate. It is the most predictable interest rate in terms of ease of calculating the expected profit. Fixed interest rates are beneficial for short-term deposits, as it allows you to be sure that the terms of the contract will not change during the term of the deposit. In contrast, variable interest rates depend on changes in interest rates set by the Monetary Policy Council at the NBP.
If the interest rates increase, then the interest rate on the deposit will also increase. When selecting variable interest rates, you must be able to predict changes that will be made by the Monetary Policy Council. The variable interest rate is more advantageous when establishing long-term deposits because in the long-term even interest rate drops do not have such a large impact on deposit profits. Another type of interest rate is dynamic interest. Such interest rates regularly increase during the term of the term deposit contract.
Progressive interest rate brings higher profits the longer the term deposit agreement lasts. The most advantageous term deposit offers, regardless of the type of interest rate, include bank deposits offered on promotional terms.