We were curious as to how much interest we could get if we chose bank deposits to deposit our savings. We look at deposits and show that despite the low central bank base rate, deposit rates above 2 percent can be found. Plus, we can report some good news, let’s see what it is!
Let’s start with the good news, which is an important change that will bring slightly higher returns for those who save their money. In November, next year’s tax package was adopted, which included the abolition of the EHO , so that from January 1, 2017, there will be no further deduction of 6% plus 15% interest tax.
As a result of this change, slightly more of the interest earned on our deposit will remain. Although this 6% is not a significant amount, since the interest on a 1 million USD deposit is only about one thousand USD, such a small additional saving is beneficial even with the current low deposit interest rates.
The 15% interest tax
It can also be fluctuated by depositing money in a TBSZ (Long Term Investment Contract) account. At TBSZ, after 3 full calendar years after the account opening year (collection year), 10 percent of the interest is deducted from tax instead of 15 percent, and after 5 full calendar years, the interest tax is 0 percent.
We get several comments under our deposit deposits articles that ” I will never put my money in a bank again, I would rather put it in the pillow case! “But if you think about it, you have to realize that it is not a smart idea to keep a significant amount of cash at home. Unfortunately, extraordinary events, home fires, or even burglaries may cause us to say goodbye to our small fortune.
We are safe in the bank
Because the National Deposit Insurance Fund pays compensation for the money we deposit in deposits in the event of the banks becoming insolvent. The indemnity is equal to or less than $ 100,000 per depositor and per credit institution, ie slightly more than $ 30 million.
Thus, term deposits remain the safest form of savings, and when you make a deposit, you know in advance how much interest you will receive at the end of the term. To find the best option for us, it is worth comparing the help of deposit calculator offers.
Interest above 2 percent, even unconditionally
Looking at the offers of several maturities, we can see in the calculator that you can get the highest interest rate for a 12-month or 24-month deposit by choosing BNP Paribas A Deposit For Future . BNP Paribas offers an annual interest of 2.40% on a 24-month maturity, when depositing fresh money. The bank will treat as fresh money the amount that came from sources outside the bank that were not committed within 90 days prior to the deposit date. With a deposit of $ 1 million, we can increase our net savings by $ 41,187 over two years.
BNP Paribas offers a good opportunity even if it is not fresh money, as in this case the standard interest rate will be 2.30% . This translates into a net profit of $ 39,455 over two years. It is interesting that there is no significant difference, the bank gives almost as much interest without meeting the fresh money condition. The net interest was calculated by deducting the 15% interest tax and taking into account that from 1 January 2017, savings will no longer be subject to the 6% EHO, or health contribution.
It is also important to know that BNP Paribas will pay 30% of the interest in case of a deposit break if we wish to withdraw money within 90 days of the deposit . Clients can manage their deposits online and all transactions can be made online (or by phone or in person) and deposits placed here are covered by the French Deposit Guarantee Fund guarantee up to EUR 100,000.
An annual interest rate of over 2 percent can also be achieved by depositing our savings in a Cetelem Savings Account. The annual interest rate on this offer is 2.10%, which is only slightly lower than the interest rate on the best term deposit. The Cetelem Savings Account is a sight deposit where the bank pays interest on a daily basis based on the daily closing balance while the money is in the account. The advantage of an overnight deposit is that it can be withdrawn at any time without loss of interest. If you hold $ 1 million in this overnight deposit for 1 year, the net interest minus a 15% interest tax will be $ 17,850 over 1 year.
TBSZ may also be needed
At Granit Bank , we can also deposit our money at an interest rate of over 2 percent, in the Special TBSZ deposit , which currently yields an interest rate of 2.25% for a 12-month term. This deposit can only be deposited on a TBSZ account, which gives you an interest tax deduction or exemption.
It is worth mentioning that the interest rate of the Granite Bank Floating Deposit is linked to the MNB base rate, so it may decrease or increase the interest rate of the deposit with maturity. Currently, we can expect a 2.00% interest on this deposit, which gives a net interest of 17,000 $ at the end of the 12-month term calculated on 1 million dollars.
Combination or security?
You can find combined deposit offers at several banks. For example, an option where you have to buy an investment certificate or Hungarian government securities at a value equal to or even double the amount deposited in order to get high interest. An example of such an investment offer is the CIB Duo ECO Savings, where the bank gives an outstanding 6.00% annual interest rate on the deposit portion over a 2-month maturity. If you choose this option, the $ 1 million deposit portion will yield a net interest of $ 8,500 over 2 months. This deposit requires, inter alia, that you purchase an Interest-bearing Treasury Bill for the same amount as the amount deposited.
In the case of offers combined with an investment certificate or a bank bond, or even life insurance, it is important to know that their yield may vary depending on the yield of the investment instruments in the fund or bond. The maturity of bonds and mutual funds required as a condition of the special interest rate may be several years, which can significantly exceed the maturity of the deposit part. It is advisable to invest our money in such combined investments only if we are fully aware of the characteristics of the assets they contain.