Deposit is Deposits in banks. Interest on deposits

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Bank deposit is one of the investment instruments that is considered the most accessible and safe even for people who do not know all the intricacies of financial management and banking. With it, you can not only save your money in constant inflation, but also increase it.

Earn deposits in banks actually allow a little, but in terms of money back, they are the most reliable. In addition, their reliability is proved by the presence of special government programs that oblige to insure the deposit in case of bank failure. This makes it a fairly safe way to invest free funds.

Types of deposits

There are three types of deposits according to the method of cash management:

• classic, which completely restricts the contributor, i.e. he can neither replenish nor withdraw money from the deposit account;
• deposit that allows the depositor to replenish it;
• deposit that allows you to make additional deposits and partially withdraw money.

Deposits in banks can be called differently, but they are all divided into three types:

• urgent;
• savings;
• on demand.

Term deposit

Term deposit, as the name suggests, is issued for a certain period of time. At the same time, it should be taken into account that the minimum period for which it can be opened is thirty days, the maximum is several years.

Term deposits of individuals have their own subtypes:

• deposits with monthly interest payments;
• with payments at the end of the contract.

As a rule, you can earn more on the last subspecies of the term deposit than on the first one.

Savings deposit

A savings deposit is a deposit within which you can additionally deposit funds into your account. The term of the contract is usually more than six months. Interest is accrued on the balance of the amount on the deposit account daily, the depositor can receive income in the form of interest at the end of the minimum period specified in the agreement.

On demand

Demand deposit enables its owner to freely manage the funds in the account. Interest on demand deposits is usually small - rarely exceeds 1% per annum. Some deposits of this type can be automatically extended by the bank, but on less favorable terms.

In what currency should I deposit?

Any Russian bank opens deposits of individuals both in rubles and in foreign currency. In addition, there are multi-currency types of them.

Multi-currency deposit is the placement of funds in different monetary units on one deposit account at different interest rates. Banking experts recommend opening this particular type, since in the event of a force majeure situation, the depositor has the opportunity to win at least one of the currencies.

Another point to consider when opening a deposit is that the interest rate on foreign currency deposits is lower compared to a ruble account.

How to choose the most profitable deposit?

What should I pay attention to when making a deposit? This is, of course, the level of interest rates. It determines the amount of income that the depositor will receive for having transferred his money to the bank for use.

The interest rate depends on the following indicators inherent in the deposit:

• sums;
• term of placement;
• view.

It is worth emphasizing that high interest rates on deposits do not yet indicate the reliability of the bank.

As a rule, an agreement signed between a bank and a depositor does not allow the first to unilaterally change the interest rate, except in some cases (this applies to deposits with interest capitalization and prolongation).

Calculating interest on deposits

The accrual of interest on deposits can occur as follows:

1. After the deposit expires, they are credited to the initial amount.
2. Payout occurs regularly, such as monthly or quarterly.
3. Scapitalization of interest on the deposit. This method involves adding to the amount of the contribution income in the form of interest for a certain period, and in the next period they will accrue a large amount. The remuneration is paid monthly, quarterly, annually or at the end of the contract term. For deposits with capitalization, as a rule, the interest rate is lower, but it can bring more income.

Prolongation

Prolongation of a deposit is an extension by a bank of an agreement to open a deposit after its expiration and registration of a new deposit for a new period without the consent of the depositor. If the deposit agreement does not provide for prolongation, then the entire amount (principal and remuneration) will be transferred to the client's account, and interest will no longer be accrued. To resume accrual, you need to contact the bank to open a new deposit account.

It is necessary to pay attention to the fact that not all types of deposits provide for prolongation. To use this service, a clause about it must be included in the deposit agreement.

Basically, when making a deposit, the client will be required to present a passport of a citizen of the Russian Federation. If a person wants to open a deposit account for a close relative, the bank will require him to present his documents or their copies certified by a notary.

Deposit Insurance Agency

DIA was established to develop the deposit insurance system in Russia. It guarantees depositors the return of funds in their deposit accounts tobank failure.

Over the years of its operation, this system has repeatedly demonstrated its excellent work, and thereby increased the attractiveness of deposits for citizens of the Russian Federation.

Conclusion

If you can allocate some, albeit a small amount of free cash every month and want to save it for some purpose, then a bank deposit in this situation will be a good option.

It is clear that this way of investing funds will not bring a luxurious life on interest in the future, but it will undoubtedly help to solve some issues. In addition, by placing money in a bank, you can not worry about their safety, and the reward you receive will cover the ever-growing inflation.