Why Do You Need a Bank Deposit?

Probably everyone wants to increase their savings. You could try investing, but that requires either luck or a deep understanding of the market. There is a simpler and more reliable option: we explain how a bank deposit works and why it is needed.

What Is a Bank Deposit?

When you take a loan, you return more to the bank than it gave you — this is how you pay for the service. A deposit is the opposite situation. You temporarily give money to a financial organization, and it accrues interest, increasing your savings.

Each deposit has its own terms of opening, for example:

• Term: when it ends, you can withdraw the money, or leave it, in which case the bank automatically extends the deposit for the same period.
• Minimum amount: the interest rate depends on it, as well as on the term.
• Interest payment period: monthly or at the end of the deposit term.
• Ability to replenish and withdraw: you can add or withdraw money at any time or only at the end of the term.

What Are Deposits Used For?

To Preserve Savings

If you received profit from selling a car or simply save a certain amount each month, you probably want to preserve your funds. Keeping them at home is unsafe and unprofitable: even with small inflation, money loses value. Putting them into a deposit is more practical.

To Accumulate

Saving money can be psychologically difficult: some people spend all they have. A deposit makes the funds less accessible: if you withdraw them before the end of the term, most of the accrued interest is lost. To accumulate gradually, choose deposits with the option to add funds or savings accounts.

To Increase Savings

Money should generate profit. The larger the investment, the more significant the profit. The income may not be as high as with investments, but the risks are lower. Understanding how deposits work allows you to create a ladder — opening several short-term deposits and receiving income from each.

Benefits of Bank Deposits

• Reliability: the money will not be stolen or lost. In case of an insured event, you will get a certain amount back.
• Ease of opening: deposits can be opened remotely in just a few minutes.
• Wide selection: there are offers for different terms, interest rates, amounts, and options.
• Income: deposits increase capital.

Can Terms Be Changed After Opening a Deposit?

Interest rate, interest payment period, the ability to replenish the deposit or withdraw funds — these and other conditions must be chosen initially, as they do not change. However, the account for crediting interest can be changed later.

Determine why you need a deposit, choose the terms that match this goal, and open the deposit.