Since the spring of 2022, interest rates have not stopped rising. In its most recent upward adjustment, the European Central Bank (ECB) has implemented an increase of 25 basis points, placing the official interest rate at 4%. This has caused the remuneration of savings deposits to have been increasing ever since. However, it has also raised a question... When will they reach their maximum level?
No one can answer this question with certainty, since the ECB's interest rate decisions are closely linked to the unpredictable evolution of inflation. But, given this uncertainty, it is inevitable that savers have doubts as to whether or not they should wait for future increases in interest rates to take out a deposit.
From Raisin, the European savings platform, they assure that waiting is not a wise decision because it has a cost.
Waiting is pointless, since it implies a double loss. On the one hand, savings deposited in a checking account do not earn any interest and are affected by inflation. On the other hand, the returns that could be obtained in a savings account with a higher interest rate are lost.
"During the last quarter, we have witnessed a sustained increase in interest rates on all term deposits offered by the banks on our platform. In particular, short-term deposits, of up to one year, have experienced a significant rise, reaching rates as high as those observed in some 4- and 5-year-old products", explains Mónica Pina Alzugaray, Director of Raisin Spain.
This expert assures that it is in long-term accounts where savers can obtain the maximum return for their money. "We have observed a moderation in rate increases for 3-, 4-, and 5-year terms, reflecting banks' confidence that interest rates will be lowered again in the near future," adds Pina.
Therefore, savers who want to take full advantage of the current high interest rate situation should place part of their savings in a one-year fixed-term deposit, securing higher interest for a longer period of time, before for them to start to decline.
Indecision and waiting only cause savers to stop earning money. Raisin offers us a very clear example to understand it.
Therefore, it is unnecessary to wait because such significant increases in interest rates are not expected to compensate for having had the savings retained for months.
The interest rate on the classic 1-year deposit has reached a new milestone, standing at 4%, when in June last year it was barely close to 1%. In fact, the 1-year deposit of Banca Progetto has reached this 4% APR, the best offer in Spain in more than 14 years. An offer that marks a milestone, since it is the highest interest rate that has been registered in Spain since 2008.
"Today is an important day for savers. In the last four months, fixed-term deposits have experienced unprecedented increases, especially one-year deposits. A deposit with a 4% APR is something that has not been seen for more than 14 years. The best current option for one year is the deposit with a 4% APR from Banca Progetto, which is protected by the Italian Deposit Guarantee Fund (FGD) and is available through Raisin.es", he assures Mónica Pina Alzugaray, Director of Raisin Spain.
