The profitability of time deposits continues to risewhich has made them one of the most coveted products to take advantage of savings without taking risks.
Since the European Central Bank (ECB) began to raise interest rates in July of last year with the aim of curbing inflation, the appetite of families for fixed terms has been increasing.
According to the latest data from the Bank of Spain, families had invested 986,200 million euros in deposits at the end of Februarywhich represented an increase of 2.18% compared to the same month of 2022.
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After six consecutive rate hikes, the last one in March which placed the price of money at 3.5%, financial institutions have been increasing the profitability of their deposits to exceed 4% APR in the longest terms, an unthinkable figure A year ago, interest rates barely exceeded 0%.
The entities that best offers on deposits Small and medium-sized banks, most of them foreign, that operate online and offer long-term interests of up to 4.14% APR in the market with the aim of attracting liabilities and improving their liquidity.
This is the case of Banking System, the entity that best remunerates long-term deposits. The Italian bank offers a return of 4.03% APR on its 3-year deposit; in the 4-year interest is 4.09% and in the 5-year it reaches 4.14 percent APR. To grant these returns requires a minimum investment of 20,000 euros and a maximum of 100,000.
Of course, it does not allow early cancellation of deposits, it pays interest at maturity and its contracting is done online through the Raisin electronic platform.
Thus, a saver who decides to invest 50,000 euros in the 3-year deposit in the entity will receive returns of 6,045 euros. If you opt for the 4-year deposit, the returns will be 8,180 euros at the expiration of the term and if the deposit chosen is 5 years, the interest will be 10,350 euros.
Long-term deposits are “a good option for the most conservative savers who do not want to put their money at the mercy of the fluctuations of the stock market and that they consider that the end of the rate rise cycle is near and that soon the profitability of deposits could stagnate or even begin to fall”, argues Javier Mézcua, HelpMyCash personal finance expert.
But everything suggests that the rate hike will continue, especially if one takes into account that ECB sources have already announced that it is very likely that the next meeting held by the supervisor on May 4 will result in a new rate hike. interest rates with the aim of curbing inflation, which in the euro area stood at 6.9% in March, far from the ECB’s target of 2%. While the underlying set a new record by climbing to 5.7%.
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“The European Central Bank is expected to continue raising rates, the question is how aggressive it will be in its next meetings,” predicts Javier Mézcua.
In this context and despite the high profitability of long-term deposits, investing in them is not the best strategyrecognizes Antonio Gallardo, Banqmi’s financial expert, since “they require keeping capital immobilized for a long time and the saver may lose the opportunity to invest in other more profitable products that come on the market.”
To avoid this problem, the best option is to invest in both short-term and long-term deposits, recommends Estefanía González, Kelisto’s personal finance spokesperson.
In his opinion, if rates continue to rise, it is normal for deposits to still have room for improvement and to be able to take advantage of these increases, “it is best to have part of the money invested in the short term, so that we can move it when we consider it appropriate. Of course, a part should also be allocated to longer-term deposits, which are the ones that offer the juiciest remuneration”.
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