As it turns out, the profitability of deposits is a very variable factor and it is not always profitable to put money on deposits, and on the other hand it is not always profitable to invest in the capital market. So how to approach saving on bank deposits correctly, to avoid problems and make it profitable for us, check offers.
Growing amount of available savings
A bank deposit is profitable, but only with the growing amount of available savings. The more savings we have, the better the chances of getting better conditions and higher interest rates from the bank. Body institutions also appear in the banking sector which only serve clients with a high capital surplus.
Saving on bank deposits is profitable with amounts of USD 100, 200, 300 thousand, although unfortunately these amounts are usually not available to an average household. Another issue is the maximum extension of the period for setting up a bank deposit.
Better interest rates on term deposits
Thanks to such a decision, we will receive much better interest rates on term deposits, but on the other hand we will limit our liquidity. By opening a bank deposit and canceling it before the end of the contract period, we lose all interest earned so far.
A huge problem when it comes to bank deposits is also the capital gains tax, although maybe soon something will change in this matter, then certainly more people will decide to save through deposits. As it turns out, saving on bank deposits is only profitable with high interest rates and relatively low inflation. Unfortunately, the current economy is in a period of very low interest rates, which does not encourage saving in this way.
Increase the interest rate on a bank deposit
Fortunately, there are also other methods to increase the interest rate on a bank deposit, including the use of promotional savings deposits, the use of many services at a given retail bank, which will open the field for negotiating with a given bank about better and more favorable conditions for us. We also have the option of choosing a specific type of deposit dedicated mainly to industry specialists, e.g. doctors, lawyers, business owners or IT specialists.
Despite the many advantages and disadvantages of bank deposits, many people still use such a solution, although sometimes it turns out that it is not very profitable and a better investment would be to invest their capital, e.g. in real estate or in another capital way.