There is never much money: the more we earn, the more we spend. But, some lucky ones manage to accumulate a tidy sum. If you are among them, then you will certainly wonder where to spend it.
There are a lot of ways, but you need to think it over carefully. If you want your money to work for you, then you can try to do business. However, not everyone is endowed with a talent for entrepreneurial activity and there is a chance of failure.
Alternatively, you can consider the temporary allocation of capital to escrow account. What is the use? Firstly, the money will be stored in a safe place in which attackers can not penetrate. Secondly, it will be possible to earn some money at the expense of the deposit rate that the bank will pay.
In this article we’ll take a closer look What is a deposit? what types of service is this, its features and conditions.
The appearance of deposits
Banking system not always as developed as it is now. For example, until the 19th century, not a single bank existed in Russia, much less anyone knew what a deposit was.
At a time when only writers could dream of monetary currency, people carried out trading operations mainly in gold, bronze or silver coins.
Both now and then, there were wealthy gentlemen who possessed wealth in large quantities. They hired security, which was supposed to protect their property day and night from the assassination of thieves, who for the most part were simple workers without an extra piece of bread.
As you know, there is no supply without demand, and in ancient Greece, special savings cells began to appear in temples. They could store their property, pre-paying for this service.
In the process of evolution of financial relationships, Europe began to pay merchants to place their funds with the so-called first bankers. This can be considered the appearance of the first deposits, which to this day are quite popular.
What is a deposit?
This is a deposit that is placed on a special account. For the fact that a person has entrusted and put his money on a deposit, a bank or other financial institution in which an account is opened, he accrues a bonus (interest) on the amount of the deposit.
This is beneficial to both parties:
- the depositor has placed his funds in a safe place, he is not worried about their safety;
- at the expense of the old capital, the investor earns a new one;
- the bank receives liabilities that it can use for lending to customers.
Of course, the current interest on deposits does not allow you to earn in the full sense of the word. But they are able to reduce the negative impact of inflation and have proven themselves in practice.
Types of deposits
We continue to understand what a deposit is, consider the existing types of deposits.
By term of validity, you can divide deposits into the following positions:
- Short-term (up to 3 months).
- Medium-term (from 3 to 6 months).
- Long-term (more than 6 months).
Often, banks are interested in long-term liabilities, so deposits with a term of more than 6 months have higher rates compared to others. An exception may be the plight of a particular financial institution that does not have enough money. In this case, banks prefer to create preferential terms and raise rates for short-term deposits.
For the population and enterprises
Depending on the type of person who is the depositor, banks open:
- deposits to individuals;
- deposits to legal entities.
Often, people are offered to place deposits with a higher interest rate than firms and enterprises. This is done in order to attract as much money as possible from individuals.
Banks are interested in this, as firms and enterprises cannot keep their funds in a deposit account for a long time. Financial institutions need long-term liabilities, so they try to attract the maximum number of deposits at the expense of the population.
Interest accrual
Depending on the method of calculating interest, deposits exist:
- with capitalization;
- without capitalization.
Typically, capitalization is held by deposits that can be replenished at any time, and there are no restrictions on withdrawing funds until the expiration of the banking service agreement. Thus, the deposit amount is constantly recalculated and interest is accrued only on the balance.
On deposits without capitalization, the rates are always higher. This is due to the fact that such deposits have a fixed term and do not imply the possibility of withdrawal or replenishment, which is more beneficial for the bank.
Which deposit to choose?
Based on the above list of types of deposits, we can say that in each bank there is a wide range of financial services offered.
For example, deposits of Sberbank are represented by the following list:
- “Save.”
- "Replenish."
- "Manage."
- "Gift a life".
- "Multicurrency deposit of Sberbank of Russia."
- "International".
- Savings account.
Financial institutions are trying to create the maximum number of various options so that the potential client can choose for themselves the appropriate type of deposit.
The main points that you should pay attention to when choosing a banking product should be:
- interest rate;
- bank reputation;
- transparent terms of service.
Interest on deposits indicates the current market situation and the stability of the position of the financial institution that offers them. If the rate level differs sharply from the average offers of other banks, then this may indicate an unstable situation or a violation of the financial component.
Deposits today play a special role: they help to save and increase funds. In this matter, it is very important to trust your money to those banks that have a reputation for reliable. No one wants to deposit funds into an account with a financial institution that is little known.
Transparent terms of service imply no hidden fees on deposits. For example, they are possible with cashless transfers from other accounts, as well as with cash withdrawals from cash registers.
