In order to receive a stable high income, which can guarantee their owners , potential customers of a financial institution should deposit money on a long-term deposit. In this case, a person receives passive income. But it is precisely at the conclusion of a long-term contract that the interest rate will be fixed at a certain level, and it will be higher than with a short-term deposit. And, as a rule, such a rate is always an order of magnitude higher than when concluding a deposit agreement on other conditions. The legislation does not provide for the possibility of a bank unilaterally without the consent of the depositor to change the interest rate in the direction of reduction. But, as practice shows, banking institutions have a lot of tricks with which citizens, unaware of financial issues, can suffer losses as a result of long-term investments. The most common of these are:
1. The bank shall prescribe a floating rate in the deposit agreement. It may consist of a coefficient multiplied by the discount rate. If the official discount rate is reduced, the deposit rate is also reduced.
2. By placing deposits with banks, the client can sign an agreement in which the condition on the revision of the interest rate to the side of reduction will be fixed upon prior agreement with the depositor. In practice, it looks like this: the bank sends a letter in which it indicates a rate reduction. If the client agrees with these conditions, he must confirm this in writing within the prescribed period. If the depositor does not agree to reduce the interest rate, the bank offers him to terminate the contract ahead of schedule, but the interest on such a deposit will be paid taking into account its premature withdrawal. Naturally, financially, the investor will suffer. It is also not always possible to prove anything in court, because upon conclusion of the contract the depositor signed under the conditions under which the bank can offer him to lower the interest rate.
The significant disadvantage possessed by long-term there is a risk of losing money in the event of a system crisis - early withdrawal of deposits is not provided. For banks, in turn, it is beneficial to raise money for long-term deposits. In this case, they get free access to the management of these funds at their discretion.