Everyone is trying to gain financial independence and work not for someone but for themselves. This is understood as the gradual accumulation of primary capital, which will be enough for further life or stable earnings when starting a business.
Putting money under the pillow is stupid and dangerous, which our ancestors have long understood. Even in those days when people did not know what deposits were, dollars did not go around the world and mankind did not know about “paper” currencies at all, the main methods of calculation were gold and barter.
Having accumulated enough values, a wealthy man worried about their safety. This is not surprising, because from the security systems then there were only dogs and castles.
In this regard, the service of saving property became popular. A rich man gave his gold and other valuables to a special institution that guaranteed the protection of trusted property. Such a service was provided not for free, but some share was taken for storage. In today's world, this can be compared to the service of a depositary cell in a bank.
But in the process of evolution of financial relationships, people who trusted their gold also offered a reward for storage. Thus, the first deposits comparable to modern ones appeared.
What are deposits?
This word refers to cash deposits that are placed by customers in banks on certain conditions according to the contract. An obligatory item is the calculation of interest for the fact that a person has temporarily entrusted the disposal of his money to a financial institution.
Answering the question about what deposits are, we can say that this is an account that is opened at a bank for a certain period of time. It brings income to the owner. This type of financial services can be used by both individuals and legal entities, including international organizations or entire countries.
Types of Deposits
Each bank offers individual requirements on which it is ready to take funds from the client. Since these services are provided on a competitive basis, you can independently choose a financial institution with the most attractive conditions for depositing.
So, understanding what deposits are, we will divide them into different types depending on the following conditions. Given the validity period, contributions are divided into:
- urgent;
- perpetual.
Bank deposits of the first type have a specific time frame of action, which are specified in the contract for opening an account and placing funds. After this time, the contract is considered closed, and the bank must pay the funds with accrued interest to the depositor.
However, there are prolonged deposits of money — those in the agreements on which it is stipulated that if the client does not contact the branch of the financial institution on time for various reasons, the bank will automatically renew the contract for the same period at the current interest rate.
Perpetual accounts are accumulative accounts characterized by a low interest rate. Under the terms of these types of deposits, the client has no restrictions on withdrawals. The bank’s low interest in such agreements is understandable, because it is not beneficial for him to have liabilities that may disappear at any moment.
How are interest calculated?
Equally important is the method of calculating interest. It seriously depends on what benefit your funds on deposits will bring. Focusing on this indicator, contributions exist:
- with capitalization;
- without capitalization.
Deposit rates at banks is one of the most important factors that affects the opinion of people when choosing a financial institution to place a deposit.However, the method of calculating interest also plays a large role.
Interest capitalization is daily and monthly (more common). It implies that the bank accrues interest every month and adds it to the body of the deposit. Thus, starting from the next month, accruals will already take place on the invested deposit, which is increased by the amount of interest of the previous month.
For example, you have 1 million rubles. You are considering the conditions of two banks: one offers 4% for four months with capitalization, and the other - 4.05% with standard charges. What to choose?
Calculation example
You can calculate a better offer as follows.
Offer from Bank No. 1:
- 1000000 + 1000000*(4% / 4) = 1010000 p. - the first month.
- 1010000 + 1010000*(4% / 4) = 1020100 p. - second month.
- 1020100 + 1020100*(4% / 4) = 1030301 p. - the third month.
- 1030301 + 1030301*(4% / 4) = 1040604.01 p. - the fourth month.
Bottom line: in three months you will receive 1030301 rubles.
Offer from Bank No. 2:
- 1000000 + 1000000*4.05% = 1040500 p. for four months.
Bottom line: you will receive 1040500 rubles at the end of the deposit agreement.
As you can see, starting from the fourth month, a deposit with capitalization of interest becomes more profitable for the investor, even despite a lower rate than in the second offer.
Bank Offers
The market for banking services in terms of deposits and loans in the Russian Federation is quite specific, as in some other countries. The difference is in high interest rates on loans and, as a result, on deposits.
Abroad in developed countries, deposits are not considered a way to make money. Deposits are used only as a reliable tool to keep their money in a safe place, which will keep the cost of capital in a low inflation.
Betting Examples
Today, one can observe the following deposit rates at banks in Russia:
- Urgent in rubles: for 3 months. - 6.0-7.0%, 6 months - 7.0-7.5%, 12 months - 7.5-8.0%.
- Urgent in foreign currency: for 3 months. - 0.2-0.5%, 6 months. - 0.5-1.0%, 12 months 1.0-1.7%.
- Unlimited in rubles: 0.1-5.0%.
- Perpetual in foreign currency: 0.1-0.5%.
As you can see, interest on deposits in foreign currency is much lower than in rubles. This is largely due to the influence of the exchange rate on bank profits. If the ruble exchange rate drops sharply, then deposits in another currency will become costly for them.
The level of rates on bank deposits depends on the business policy of a financial institution.
For example, if a bank is in great need of money supply, then interest on deposits will increase. If a financial institution is able to fully confirm loans issued with a balance of available money, then it will not chase customers with new deposits, offering them the most favorable conditions in the market.
What is needed to open such an account?
So, if you have decided on a suitable bank and type of deposit, then to open an account you will need to have a passport, identification code and, of course, money. To conclude an agreement, you have to come to the bank branch with the originals of the above documents.
If you are a legal entity, you may need the following:
- statutory capital, as well as other statutory documents;
- tax certificate of registration;
- extract from the state register of legal entities;
- passport, identification code of the head of the company, as well as the chief accountant.
Remote clearance
There are also such financial institutions that fully work through the Internet without physical representations. In this case, to open a deposit, you will need to make scanned copies of your documents, send them to the specified email address.
In addition, a special application will have to be filled out on the computer. After that, a call from the contact center with confirmation of operations is possible. In the event that you request a contract or other supporting documents with a “wet” seal of the bank, they will be sent to you by courier.