A bank deposit is a safe and secure way to invest money. The interest rate is fixed and known in advance, and the money is covered by the Bank Guarantee Fund. Learn more about bank deposits.
What is a bank deposit? Definition of the term
Abank deposit is nothing more than saving money in a bank. It is one way to invest safely and securely. Bank deposits are interest-bearing, which means that the longer we keep our money in the bank, the more money we can earn. Bank deposits are fairly safe, but they are not risk-free. If interest rates rise, banks can lower interest rates on deposits, which means our money will lose value. Bank deposits are also not flexible – if we need the money, we have to withdraw it, and this can result in the loss of some of the earnings.
Types of bank deposits
There are many types of bank deposits on the financial market. Before deciding to set up a specific deposit, it is worthwhile to familiarize yourself with all the available options. This way you can choose one that best suits your needs and expectations. Among the most popular types of bank deposits are term deposit, structured deposit, safe deposit, annuity deposit.
Termdeposit is the simplest and most popular type of deposit. Its main advantage is simplicity. The customer decides on a certain amount and the period for which he wants to deposit it. When the term of the deposit expires, the money is returned to the owner. Term deposits can be attractive because of their relatively high interest rates.
A structured deposit is a type of deposit that combines elements of a term deposit and an investment. It is based on a so-called index or investment fund. Depending on your choice, you can use a deposit with or without dividends. A structured deposit is riskier than a term deposit, but can bring greater rewards.
Asafe deposit is a type of deposit that guarantees a return on the amount deposited. It is an especially attractive option for people who are afraid of risk. Interest rates on safe deposits are lower than on other deposits, but the money is safe.
An annuity deposit is a type of deposit that is designed for people of retirement age. These people can take advantage of capital gains tax exemption. The interest rate on annuity deposits is relatively low, but for people of retirement age it is an attractive option.
Before deciding to set up a deposit, it is worth thinking carefully about your options and expectations. This will help you choose the type of deposit that will best suit your needs.
How to calculate the profit from a bank deposit?
The profit on a bank deposit is calculated by multiplying the amount we deposit by the duration of the deposit and the interest rate on the deposit. For example, if we put PLN 1,000 on the deposit and it lasts for a year, and the interest rate is 2%, our profit will be PLN 20. Remember that the profit on the deposit is subject to personal income tax, which is 18%. So if our profit is PLN 20, we will get PLN 16.6 after tax deduction. It is worth remembering that it is possible to avoid tax on profits from deposits if the deposit is set up in the form of a savings account. Savings accounts are covered by the so-called “golden” benefits, which means that you can deduct 18% from your income up to the tax-free amount. Therefore, if we have a profit from a bank deposit, it is worth considering whether it is better to allocate it to a savings account, where we will avoid tax.
Bank deposit – profitability
Bank deposits are one of the more popular financial products. Many people opt for such a deposit because of its safety and relatively high interest rate. However, is the bank deposit so profitable? Definitely yes! A bank deposit is a great way to multiply your capital. Admittedly, the interest rate is not as high as for investments, but it is much safer. It’s also worth remembering that a bank deposit is exempt from capital gains tax. As for safety, the bank deposit is one of the safest financial products. It is guaranteed by the Bank Guarantee Fund, which means that in the event of a bank failure, we can count on the protection of our funds.
