You may have also registered in the last two years that the money deposited in the banks has begun to be paid out in some way again. That is, if you saved the funds in a savings account or term deposit, you could enjoy relatively high interest rates that exceeded 6%. That is already a decent motivation to leave money in banks, especially when it came after a period of de facto zero rates, when the funds in the accounts did not carry anything at all.
Rapid reduction
Everything is, of course, relative, and it is appropriate to ask whether it is reasonable to leave money lying around at six percent interest with the 15 percent inflation we had here last year. However, according to experts, nothing much could be done anyway, and on the contrary, it was the most conservative savers who got the best out of it all. Those who tried to beat inflation, for example on the stock market, usually fared much worse, and not only failed to cover inflation, but also lost in absolute terms.
Moreover, now the situation is different. In real terms, current inflation is very low, which will be fully reflected in the total number at the beginning of next year. So the money in the savings accounts is now earning above inflation. However, it seems that it will not last long and the period of high interest rates on bank accounts is gradually coming to an end.
The first banking houses have already announced significant reductions. For example, J&T Banka, with traditionally the highest rates on the Czech market, announced a reduction as of November 20. A term deposit for 1 year will no longer bear interest at 6.2% as before, but only 5.8%. Other banks, such as ČSOB, Moneta and Česká spořitelna, also lowered rates.
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It can be solved
At the same time, it is only the first step, which is made on the basis of certain assumptions, not actual development. This depends on what the Czech National Bank decides when setting the main interest rate, which is currently at 7%. It is generally expected that by the end of the year it should be reduced for the first time, by up to 0.75%. Further reductions will then continue next year.
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Just as rates have been rising rapidly, they can now fall very rapidly, down to somewhere between 2% and 3%. However, this would mean that bank interest rates will fall even below these levels. If you want to avoid this, you now have the unique opportunity to take out a longer term deposit, for example for five years, even under the current conditions. With J&T Bank, for example, you can still arrange one for 4.75% per year, and the bank even offers a ten-year deposit.
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2023-10-23 16:00:00
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