Preservation and multiplication of money savings help to ensure financial stability in the future. One of the most popular and practically tested ways to achieve this goal is opening a deposit. This activity does not require large starting capital, and therefore is available to everyone. In order to ensure a really reliable and profitable deposit, it is necessary to choose a bank deposit carefully, taking into account all the nuances of changes in legislation, so today we will talk about it.
Targeting
First of all, you should decide on the purposes for which the account is opened. The deposit as a tool for passive income is not optimal, according to experts. Except in cases where deposits are in the tens or hundreds of millions of dollars. Then even the minimum interest provides a tangible regular income. But there are tasks that any deposit solves very effectively:
- Storage of funds. A deposit prevents money from depreciating during inflation and the potential loss of cash kept in the home in the event of theft.
- Building an untouchable reserve. It is advisable for every family to have a financial reserve in case of various force majeure situations: loss of job, illness and so on. Such a fund should be available at all times, and a bank deposit with top-up and withdrawal options is a great option for this.
- Saving for an upcoming purchase. If you plan to make an expensive purchase, it’s easy to raise the necessary amount within a few months with the help of a deposit.
- The accumulation of initial capital for investment. The main advantage is that it allows not just to save money, but to manage it. A bank deposit helps to build up initial capital faster.
The Aims of Opening A Deposit in A Bank
Parameters of A Deposit
Directly from the goals depends on the choice of a bank deposit according to the main parameters. In general, all deposits offered by credit institutions are divided into three categories:
- Demand deposits – allow you to dispose of finances at any time, but have the lowest interest.
- Term deposits have restrictions on replenishment and withdrawal, are made for a certain period, provide maximum interest.
- Modifications of term deposits allow replenishment and partial withdrawal of funds, but yield lower rate than ordinary term deposits.
With a few exceptions, the rate on the deposit is directly proportional to the amount initially invested. As for increasing the term of the deposit, the interest may increase. This point needs to be clarified with the specific bank. If the purpose of the deposit is to form a reserve fund, it is very important to be able to replenish and withdraw funds without losing interest. In this case, the mobility of finances is more important than the size of the rate. It is worth mentioning about capitalization – the assignment of interest on interest. It is not always beneficial, and when choosing a bank deposit this should be taken into account. It is no secret that many credit organizations offer a higher interest rate for deposits without capitalization, and vice versa – reduce it if there is one.
Main Criteria for Choosing A Bank
It is not difficult to decide on a place to store funds, if you pay attention to a number of important points:
- the reliability of the banking organization;
- conditions on deposits;
- developed network of branches and ATMs;
- client feedback.
These basic criteria – general, that is applicable to all banks of any type. Let us examine each indicator in detail.
Reliability
First of all, when choosing a particular bank, you should pay attention to whether the organization is part of the state deposit insurance system. This means that financial resources of about one and a half billion rubles will be guaranteed returned to the depositor in case of an insured event. This information can be obtained from the bank’s official website or at the Internet portal of the Deposit Insurance Agency. In addition to this, the degree of reliability of a credit institution is indicated by such indicators as size of assets, profit, liquidity and profitability. This data can be obtained independently from the documents freely available on the Internet. An even easier way is to ask a specialized rating agency for help.
Terms of Deposits
One of the determining criteria for choosing a bank deposit is the size of the interest rate. If a particular bank offers the highest interest rate, it makes sense to understand the reasons for this generosity. It is possible that the organization is in a difficult financial situation and is trying to quickly replenish assets at the expense of depositors. Newly opened banks need the clients, and the high interest rate is the way to attract them. In other cases it may be connected with actions and special offers or be a marketing ploy, which has a place in some unscrupulous organizations.
Other important indicators include the frequency of capitalization and conditions for withdrawal and replenishment of funds. The first criterion is especially important for long-term investments: if the term of the deposit is limited to one or two years, you will not get a tangible profit. Requirements for withdrawal and replenishment vary from bank to bank, often stipulating a certain balance on the account and limitations on the amount. If the input-output of money is not required, it is better to focus on time deposits with high interest. There are also additional conditions, which should be spelled out in the contract. These include Internet banking services, issue of a plastic card, SMS-informing. Undoubtedly, these options add convenience to bank account management, but you should keep in mind that many of them imply a commission. Any additional service can be declined, both in the process of signing the contract and after.
Network of Branches and Atms
On the site of any bank it is easy to find out what number of branches and terminals it has in a particular locality. The greater the number, the more convenient it is for the customers. Especially for those who intend to regularly deposit or withdraw money in cash. In other cases, you can do with Internet banking.
Customer Feedback
This criterion is purely subjective by definition, and you should treat it with caution. Firstly, people are more likely to write an advertisement than a thank you. Secondly, some of the reviews may be commissioned from competitors, which means that they have nothing to do with reality. Nevertheless, with careful study you can get indirect useful information.
Types of Deposits
Demand deposits. In this case, you have the right to demand your money back at any time. Therefore, the bank does not want to pay a high interest rate for not being allowed to freely dispose of the money. For such a deposit, you can count on no more than 0.01% per annum.
Term. A deposit for a certain period (a month, 3 months, six months, a year, or several years). This is the time during which the bank has the right to dispose of your money at its discretion. For that, it pays you interest. The statement that the longer the term, the higher the interest, is false. In some banks, if the term is longer, the return on the deposit is lower.
Conclusion
When choosing a bank to open a deposit, it is convenient to use search filters on special sites. For example, you can set your parameters at once: term, type, terms, currency, etc. This will save a lot of time, especially since the information on the site is current as of the current date. Moreover, today we considered the deposit schemes and how to choose the bank.