Deposits no longer provide profits due to high inflation. What should be the interest rate to make money on deposits?

According to preliminary estimates, inflation rose sharply to 4.2% in July. If this trend continues in the coming months, bank deposits may suffer losses again.
It is true that banks raise interest rates slightly, but mainly on deposits of no more than three months. In addition, the offers are built on such assumptions that undoubtedly do not serve the entire savings, but are aimed at attracting people.
This is why the average deposit interest rate is half as low, and this is the only way to assess profitability in a longer perspective than half a year.

What interest rate should be on a deposit to make a profit?

Experts from the multi-comparison of financial and insurance products, rankomat.pl, constantly analyze the situation on the market of deposits and bank accounts.
According to the analysis, as of January 2024, people who keep their savings in banks can enjoy small profits of about one percent, as a result of low inflation and high interest rates maintained by the Monetary Policy Board.

The good performance of the deposit market is evidenced by the data of the National Bank of Poland, according to which the average interest rate on bank deposits in June was 4.1%.
Most banks offer three- and six-month deposits, with an average interest rate of 4.4%.
So far, taking into account inflation (2.6%) and capital gains tax, deposits at this interest rate have generated less than one percent of net profit. Thus, deposits have fulfilled their basic role: they have provided a safe and stable profit and protected savings against inflation.

But these calculations have now been upset. In July, electricity and gas prices for households were liberalized, contributing to a sharp increase in inflation to 4.2%. At this level, inflation completely absorbs the average premium that banks offer to deposit holders.

Investment Profit: With an inflation rate of 4.2% and a Belka tax, it doesn’t even protect against capital loss.

As Kamil Trembacs, financial products analyst at rankomat.pl, commented, after the government withdrew the energy shield, it was clear that inflation in Poland would rise. In July, it rose slightly less than analysts had expected, who had forecast an increase to 4.4%.
The liberalization of electricity prices is likely to have a negative impact on inflation readings in the coming months.
– This data is definitely They are not optimistic for people who have savings in deposits and savings accounts. While a month ago we were talking about profits from investments, now, due to high inflation, success will be the situation when they do not bring losses, adds Kamel Trimbaks.

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Bank deposit without loss: The interest rate must be at least 5.3%

Calculations made by rankomat.pl experts show that for a deposit to protect savings from inflation at 4.2%, the interest rate should be at least 5.3%.
This means The need to search for better promotions more often than banks. The good news is that there are now more of these offers than there were before the holiday.
– In May, we reported that the 7% interest rate barrier had been crossed by offers from three banks. Now, there are more such offers on the market – says the expert.

Deposits with these interest rates include, among others: Neste Bank, Credit Agricole, Volkswagen Financial Services.
Savings accounts with a 7% interest rate can be found at mBank, Citi Handlowy, Bank Pekao and Velo Bank.
– The first products also appear to offer an interest rate of 8% – adds the full Trimpacks.

Access to deposits at 7% interest rate is limited and not available to all customers.
For example, since July, BNP Paribas has been offering a savings account with an interest rate of 8%. To take advantage of this offer, you have to open a new account when you visit a branch. The offer itself is limited to two months, with the possibility of extending it until January 2025 after meeting certain conditions. The bank hopes to attract new customers who will stay with it for a longer period.

If you want to make money on your deposits, change banks.

This is the perfect time to change the bank you have an account with. Currently, as many as 13 out of 14 banks, whose offers are regularly analyzed by rankomat.pl experts, offer additional cash bonuses and promotional conditions for new customers.
You can make the most of your savings by using offers from Bank Millennium, Nest Bank and Santander Bank Polska. These institutions offer up to 600 PLN in bonuses. Fulfilling simple conditions and additional benefits, such as increased interest on a savings account or deposit.

Due to the similarity of bank account offers, rankomat.pl evaluates their attractiveness based on additional analysis from experts.
At the beginning of August, the average rating of accounts in 14 banks available on the comparison site Rankingomat.pl was 4.3 out of 5 possible points.
– In the near future You shouldn’t be afraid of interest rate cuts on bank deposits and savings accounts. Unfortunately, there are no clear signs that deposit rates will rise significantly in the coming months. – Analyzed by rankomat.pl expert.
– Most banks keep their offers constant. However, if there are changes, they are usually small increases, around 0.1-0.4 percentage points. For example, in August, Raiffeisen Digital Bank raised its interest rate on 3- and 6-month deposits from 6.1% to 6.5%. It’s hard to call it an upgrade, it’s just a slight correction. – Camille Trimbacks summarizes.