A deposit is a way of placing funds in a financial institution, which may be a commercial bank, investment fund or microfinance organization. Investments are made taking into account three main factors: the safety, multiplication and transparency of the system. The conditions for depositing are specified in a special agreement between a financial institution and an individual (legal entity).
In the contractual obligations the subject of the contract, the method of calculating interest, the interest rate, the possibility of replenishment and many other nuances are prescribed. At the end of the term, the owner of the funds should receive an initial deposit, as well as an increase in the deposit. What nuances should be taken into account, what to pay attention to, we will consider further in the article.
Key Definitions
To understand the essence of bank deposits, you need to understand the basic definitions. The latter are given below:
- A deposit is a voluntary placement of funds in a commercial organization to receive benefits in the form of bank interest. To ensure satisfaction of the interest rate, the structure must earn these funds on a more profitable investment. Therefore, bankers invest in securities of other commercial banks or the Central Bank of the Russian Federation with a more favorable interest rate. Please note that deposits are practically not used for lending to individuals or companies. This is associated with a high degree of risk.
- The interest rate is the payment for the use of deposit funds that the client makes to the bank. The higher the bid, the more favorable the terms of interaction. It should be noted that in modern practice simple and complex percentages are applied. In the first case, the amount in fact will be fixed, in the second, the increase is performed not only on the main, fixed amount, but also the increase of the previous period (capitalization). The interest rate may vary depending on the bank, type of currency and term of placement.
- Placement term is the period for which money is placed in the bank. At present, there is a division into revocable and irrevocable deposits, which differ in the possibility of early withdrawals. As noted above, the interest rate depends on this, because there are a number of risks for the bank.
This is enough to navigate correctly in a complex and rather unique system.
What are deposits for?
A deposit is an opportunity to enrich each side of a transaction. For an individual or legal entity - the interest rate that the bank promises. And for the financial structure, the same income, but for a less liquid investment and with a large percentage. Please note that such functioning is beneficial not only to bank employees and ordinary citizens, but also to the state. The chain helps regulate some macroeconomic indicators:
- regulation of the speed of money supply in the market;
- adjustment of inflationary processes due to changes in supply and demand for money;
- the accumulation of resources for individual public or private lending programs for the population, business;
- adjustment of interest rates for the investment proposal.
Monetary policy for the state is considered one of the most acceptable and convenient management tools, and the deposit is part of a single whole.
How does the system work?
To use the services of banks, it is enough to consider the available offers. Based on the definition, the main differences rest on the interest rate, long-term placement and the possibility of recall. Some structures make artificial barriers for investors in the form of a minimum deposit amount.
Having considered the available offers, it is necessary to open a deposit. For this, a contract is drawn up, which indicates the main positions regarding interaction. This document determines the fulfillment of obligations by the bank.
It should be noted that many people incorrectly think that financial institutions use all the funds of the client at their discretion. This is not entirely true, because some conditions are dictated to commercial structures by the Central Bank. It determines the percentage of all received deposits that must be kept in this issuing center. The remaining funds are most often directed to investment projects, and rarely to loans to individuals and legal entities.
The main types of deposits
A deposit is a rather broad concept, which has various variations and types. For a complete view, consider the main groups:
- Short and long term. Differ on the basis of the period of placement of funds in the banking structure. Usually in practice, up to a year is considered short-term, over this period long-term. The longer the period, the higher the interest rate. It is more profitable for a bank to attract long-term loans, since the income from them is also higher.
- By type of currency: issued in national and foreign. The interest rate differs by the specified factor, while it may vary significantly. This is due to the stability of banknotes, as well as state policy.
- Fixed and floating interest rate. Often, banks offer a floating rate, which depends on adjustments by the Central Bank. Especially often, the latter is manifested with long-term investments and in the direction of decrease. Read the contractual obligations carefully.
- The ability to withdraw or replenish. The contract provides clear distinctions that are specified in the terms of service. Mostly banks welcome replenishment, but not withdrawal. Although the opposite happens.
- For individuals or for commercial persons. The conditions for business and ordinary citizens vary greatly. This also applies to the amounts of investments, and the possibility of a return in the event of bankruptcy.
Having considered the main types of deposits, you can move on to the variety of interest that banks apply.
Types of interest
There are two main types of interest rates. In the first case, the usual, involves a fixed charge on a given amount. The final cost is not adjusted due to changes in the form of capitalization, since it is simply absent. Often, interest is refunded only after the deadline.
The second type is called the compound interest rate and involves the accumulation of funds every day, week, month or another period. The most common monthly replenishment of a deposit account. The presented option is considered more acceptable for the client, as it allows you to increase the funds exponentially.
Simple interest
Interest on deposits is called simple when accruals are made once at the end of the reporting period. Often banks prescribe the annual rate and use it. To calculate, you will need to find the percentage of growth from the amount of the initial cost of the deposit, then add it. Please note: if the calculation is in days, weeks or months, it is necessary to divide the interest rate by the number of periods in a year (365, 52, 12).
Simple interest calculation examples
Today, deposits of this type are rarely used, which is associated with competition in the financial services market. It is necessary to attract a client so that he invests precisely in this banking structure and in no other. As for the example, it is as follows:
- deposit term - 3 years;
- simple percentage - 10%;
- deposit amount - 5000 rubles.
How much money is given out at the end of 3 years? In fact, the client will receive 1,500, and the total amount will be 6,500 thousand rubles.
Compound interest (capitalization)
Modern deposit accounts on deposits are most often accompanied by the use of compound interest. This is due to the need to compete in the market and attract more banknotes. The formula is specific, you can evaluate it in the picture above. Please note that the growth is carried out exponentially and depends on the number of periods of storage of money on the deposit.
Compound Interest Calculation Example
For a more thorough examination, we evaluate the following problem:
- placement period - 3 years;
- the interest rate is complex, the rate is 10% subject to capitalization once a month;
- deposit amount - 5000 rubles.
What amount will be issued to the client after 3 years? The investor will receive 6655. The benefit is obvious! For the calculation, it is better to use special calculators.
Is it profitable to invest in banks?
This is a rather complicated question that is difficult to answer. There are a number of features that can bring both positive and negative effects for the user of banking services. On the plus side, the client saves money from depreciation, that is, banknotes do not lose their purchasing power.
Under various conditions, you can win on the exchange rate difference, which occurs due to a change in the exchange rate of foreign currency to national currency. If a person invested money in dollars, the rate of which increased significantly due to sanctions, then he received much more rubles in fact. It happens the other way around, because a person can store funds in domestic banknotes.
As some experts note, deposits for individuals are not considered highly liquid and profitable. It only allows you to save money subject to the stability of the economy. Too many risks exist in this area.
How to open a deposit?
To do this, you can use a simple and understandable sequence of actions:
- Choose a financial institution. This is done through special sites - information generators.
- Visit the official web resource of the bank, make sure that you have the right option for placing deposits at interest.
- Visit the bank and draw up a deposit with the signing of contractual obligations. In some cases, you can open a deposit online.
This is enough to open a personal account. In the future, monitor the results in Internet banking and get a refund by the due date.
Sberbank: deposits
Currently, the largest commercial bank of the national plan is Sberbank. It is here that the majority of citizens constantly place deposits, which allows them to secure their own funds and get a guaranteed percentage. Among the best deposits, the following should be highlighted:
- "Without a passport." This is a new, unique contribution that can be made through the Internet banking system. The minimum amount is 50 thousand rubles, but without the possibility of recall. The placement period is 5 or 12 months, while the interest rate is 7%.
- “Save.” Another good option for saving accumulated funds. The rate is 5.15%, while the amount of the down payment is 1 thousand rubles. Please note that the presented deposit option cannot be replenished, the rate is fixed.
- "Replenish." A type of deposit with a lower percentage is only 4.7%, but with the possibility of replenishment. This helps to gradually add funds to get a decent amount of output.
Sberbank deposits are not limited to this. There are other options that can be found directly on the official website of the bank.
Conclusion
A deposit is deposits made by individuals or legal entities into special accounts with banks or other financial organizations to receive benefits in the form of accruals at interest rates. In the modern market, various conditions of offers stand out, which differ in a number of factors: duration of placement, type of currency, and so on.
All funds on deposit fall into the management of institutions, which are independently enriched by investing in individual instruments and securities. As for the benefits of investing in CB, it all depends on the amount, period and other features mentioned above. In the context of modern realities, the risks are high and do not allow to reduce inflationary processes.
As passive income, bank deposits are not ideal. It is better to use revocable short-term solutions that will allow you to get the corresponding benefit while reducing risk processes.