2023-11-27 17:09:00
Photo: Canva
According to the European Central Bank, the annual growth of household deposits in Estonia is the highest in the eurozone.
The annual increase in household deposits in Estonia was 12.3%, ahead of second-place Croatia by almost 6%. On the contrary, deposits of the population of Finland decreased by 3% over the year. Among the region’s major neighbors, household deposits fell further in Portugal, Italy and Belgium, with the latter seeing a fall of up to 5%.
High interest rates attract investors
But why did deposits in Belgium fall by 5%, while in Estonia they grew by 12%? The answer lies in interest rates. According to Swedbank’s head of savings products Anni Minin, interest rates on time deposits of Estonian banks have been the highest in Europe over the past year. “It is clear that the interest of depositors depends on the interest rate offered. In Estonia, banks, including Swedbank, offer their clients the highest possible interest rate, so that in the context of rising Euribor, people can make the most of their savings,” she explained.
For comparison, let’s look at Belgium, where deposit volumes have fallen so sharply. A curious case: local banks decided not to increase interest rates on deposits, despite the increase in Euribor. In response, the government issued annual government bonds to the population at 3.3%. In response, 600,000 people in the country withdrew money from bank deposits and bought government bonds with higher rates.
“If in Belgium people withdrew money from their deposits because of the pre-tax interest rate of 3.3%, then in our country you can get 4.5% on an annual fixed deposit, which is even higher than the 12-month Euribor. Therefore, it is clear why deposits are growing in Estonia,” Minin said.
A good time to increase your money through savings
“The increase in the volume of deposits is also due to the availability of various products with good interest rates. In addition to the annual fixed deposit, banks offer those who cannot or do not want to pledge a large amount for a year to also take advantage of rising interest rates. That is why rates on three- and six-month deposits have recently increased,” Minin said.
In addition, banks offer savings options for those who want more flexibility. For example, you can open a Saver, which is essentially a modern checking account with no maintenance fees and from which you can withdraw money at any time without delays. A fixed interest rate of 2% is charged on the balance of funds in the Accumulator account at the end of each day. “We do everything we can to offer our customers the most flexible products to grow their savings. Our goal is to give everyone the opportunity to increase their available funds in a way convenient for them, supported by increased interest rates,” said Minin.
According to Swedbank AS
The post Deposits of the Estonian population are growing at the fastest rate in the eurozone first appeared on gazeta.ee.
#Estonian #deposits #growing #fastest #rate #eurozone