You’re thinking about multiplying your saved money, but you’re afraid of any risk? We have two options for you: a savings account or a deposit. See what are the advantages and disadvantages of both and assess what is more profitable for you.
Advantages and disadvantages of a deposit
A deposit is nothing more than a bank deposit. The customer makes money available to the bank for a specified period of time, in return for which he receives interest at the interest rate. A deposit can be term, dynamic, annuity or two-currency. However, the most popular banking product is a term deposit, which is usually chosen by people who want to save money.
When you decide to make a term deposit, you deposit your capital into the bank for a specific period of time – it can be either 3 months or a whole year. It is important that you can deposit money only once when you open a deposit – then it is “closed” and you cannot increase its capital.
What if you want to withdraw money earlier? Unfortunately, it will result in the loss of all the interest you have earned, and you will only get back what you have deposited. Your money is therefore “frozen”. The advantage, however, is that when you reach the end of the contract, the bank will pay you interest in addition to the deposit. And what is important – even before you open a deposit you will know how much it will cost. So if you are wondering: a deposit or an account – the service will tell you. There is a calculator available, with the help of which you can check the amount of profits and compare what pays off.
Advantages and disadvantages of a savings account
What is a savings account? It is a bank account to which you can deposit money. It differs from ROR in that interest is charged on the accumulated capital. Usually they are not as high as in the case of deposits, although you can find interesting promotions.
The biggest advantage of savings accounts is their flexibility. You can increase your capital, but if necessary, you can withdraw available funds without losing interest. So you have free access to your money at all times, although there is a risk that your savings may be less effective. You also need to know about the costs associated with savings accounts.
Most banks require that you have both a ROR and a savings account. There are few offers that allow you to keep a free savings account without a ROR. In addition, usually only one transfer in a given month is free of charge, for each subsequent one you have to pay a fee. Exceptions are banks, which allow you to make unlimited number of transfers within them. This means that you will not pay anything when you “move” funds from your account to ROR. However, regardless of the conditions, you can deposit money into your savings account anytime you want.
Deposit or account – what to choose?
What to choose: deposit or account? Both banking products are subject to taxation – the so-called Belka tax is levied on them, but it is the bank that pays them off – your capital is simply reduced by this value. A deposit “forces” you to be more disciplined, while a savings account allows you to use the funds whenever you need them.
Deposits are also usually better at interest rates. Although banks often offer favourable interest rates on savings accounts for 2-3 months. Some more experienced customers open a savings account during this time, deposit more money into it, and when the promotion is over, withdraw money and close the account. However, it is time-consuming and if you do not feel the need to dispose of your capital, it will be better to make a deposit.
However, what ultimately pays off more depends mainly on your needs.