Experts suggested that citizens earn money on bank deposits all summer
The volume of citizens' deposits in May of this year increased by 1.3 trillion rubles. The Central Bank of the Russian Federation reported this in its review “On the development of the banking sector.” This is 2.6% more than in April. This behavior is completely atypical for Russians, because in the last month of spring the vacation season begins and citizens usually want to spend the funds saved on deposits on vacation. Is it worth it to put money on deposits now or wait for a new increase in rates in banks, MK found out from experts.
Since the beginning of the year, the volume of Russians’ funds in banks has increased by 4 trillion rubles (8.7%), which is almost four times more than for the same period in 2023. In May, the increase amounted to 1.3 trillion rubles, which is 2.6% more than in April. This situation in the Bank of Russia also caused surprise. “Such dynamics are atypical for May, since usually in this month household funds grow slightly or even decrease due to an increase in pre-vacation expenses and long holidays,” the regulator’s document emphasizes.
However, the phenomenon observed in late spring may continue into the summer, given the very attractive deposit rates. Thus, the average interest rate on ruble deposits in ten Russian banks that attract the largest volume of household savings increased sharply in early June, reaching 15.69%. This figure increased by more than 0.5% compared to 15.16% recorded in the third ten days of May. Moreover, there are offers on the market to place money on deposits at 20%. Let us remind you that, according to Rosstat, inflation in our country by June 17 was 8.46%, that is, citizens can earn an amount on bank deposits that will exceed the price increase twice, or even more.
As noted by Freedom Finance Global analyst Vladimir Chernov, in May 2024 a large number of bank deposits were actually opened, which is not typical for this month: usually the population during this period is preparing for summer holidays. For comparison, according to statistics from the Central Bank of the Russian Federation, in May 2023 there was a moderate influx of household funds into bank deposits: they increased by 443 billion rubles or 1.2%, which is almost 3 times less than recorded in May 2024.
At the end of July 2024, the regulator will most likely increase the key rate by 1-2%, after which all commercial banks will also begin to increase rates on loans and deposits by the same amount. Against this background, the profitability of bank deposits will have to increase in one calendar month, so it is better to wait a little longer and then open deposits, the analyst recommends
Some Russian banks are already raising deposit rates just in anticipation of this event. But you need to carefully read the terms of deposits that offer interest rates above the key rate of the Bank of Russia, because they usually have some important restrictions. For example, an increased rate of 18% per annum is given only for new clients, or a cancellation of all accrued interest is introduced in case of early closure of the deposit.
When deciding on the terms of a bank deposit, you need to focus, firstly, on your plans, and secondly, on the highest return. In April 2024, the highest interest rates were offered on deposits for a period of 181 days to a year. According to the Bank of Russia data on the average market values of the maximum yield on household deposits for April 2024, for this period of deposit placement the yield was 17.5%. In the current geopolitical conditions, it is quite difficult to predict anything for the long term, so deposits for 6-12 months will be the best option, says Chernov.
“Before opening a deposit, you need to carefully read the terms of the agreement and make a decision taking into account your future life goals,” says Svetlana Zubkova, associate professor of the Department of Banking and Monetary Regulation at the Financial University. “It is obvious that now it is more profitable to keep funds in savings accounts with a slightly lower rate than on deposits, maintaining financial mobility, in the expectation that after the key rate is raised, banks will offer more favorable conditions.”
At the request of the banks offering high rates on deposits is influenced by the intention of the Central Bank of the Russian Federation to further raise the key rate. “I do not expect the rate to increase to 20% at the meeting in July,” said investment adviser Yulia Kuznetsova. “It will probably be raised to 17% or, in extreme cases, 18%, and banks have already factored this scenario into the deposit rates they offer.” The maximum period for high-interest deposits at the moment is 6 months, and it is better to choose it for placing funds, the expert advised.