A deposit allows you to increase your own savings. In order to avoid mistakes when choosing a financial institution, interest rates and type of product, you need to understand what a deposit is and how it happens.
Material Content:
What is a deposit in simple words
The word "deposit" in translation from English means "funds transferred to a credit institution for subsequent profit." To carry out this manipulation, a special account is opened, on which are all invested finances with accrued interest. In simple words, a deposit is an investment of money with a subsequent benefit.
Under an agreement between the parties, the investor gives the institution money for a specified period. Subsequently, these finances are used by the bank to issue loans. Thus, the bank’s profit is based on the difference between the interest received and paid.
The difference between a deposit in a bank and a deposit lies in the fact that the second represents exclusively cash, while the first can be not only finances, but also other valuable assets.
On a note! For a deposit, individuals will need only a passport.
Types of cash investments
Deposits are classified by several indicators.
By type of exemption, they can be:
- with conditions;
- urgent;
- poste restante.
By type of cash deposited:
- in cash;
- cashless.
In the currency in which the rate is calculated:
- national;
- foreign;
- multicurrency.
The interest rate is calculated taking into account the currency in the account.Although products in foreign currencies cost the client less, they can “fly a penny” in the event of inflation or currency spikes. Multicurrency deposits allow the storage of funds in the account in various monetary units.
Taking into account the owner, deposits are divided into:
- registered;
- bearer.
By target orientation:
- profitable;
- savings.
By type of obligation:
- contractual;
- with receiving a savings book;
- with registration of the sbercertificate.
The main division of financial investments is the form of their withdrawal. Each of them should be discussed separately.
Poste restante
This type of investment is preferable for those who are not aimed at making a profit. A demand deposit is more suitable for financial security. It can be opened for unlimited time and withdrawn at any time.
The demand deposit is not limited by the deposited funds or the balance, automatically prolonged and can even be bequeathed.
Consumer profit with demand deposits is minimal and does not exceed 1.5%. But to generate income, there are other types of financial investments.
Urgent
A deposit with maturities is designed to extract financial benefits. For its receipt, an exact time frame is indicated, during which the consumer cannot withdraw funds from the account. Otherwise, the interest on the deposit product corresponds to the demand rate.
Profit from a fixed-term deposit depends on the time of its existence: the longer the deposit, the higher the interest rate.
You can take profits from the term deposit every month, or capitalize (add interest to the account amount) of the deposit.
The time and interest of the term deposit will also depend on the terms of the contract. For example, a short-term deposit at its completion can be transferred to a minimum percentage or automatically prolonged.
Investment deposits are a combination of urgent investments with investments in mutual funds of the bank, which is very risky. With deposits of this type, the client can make impressive profits or suffer serious losses.
Conditional
This variety of deposits arose during the struggle between banks for customers. The conditions recorded in the contract papers may vary.
Of the main ones, one can distinguish:
- Top-up at any time.
- Early closure.
- The possibility of prolongation.
- Interest on the current deposit.
- Limitations of funds for investments.
- Time frame for the payment of investments.
- Interest capitalization period.
Each client of the bank chooses the most suitable investment conditions for him.
How and when interest is calculated on a deposit
Interest accrual starts on the day after the deposit appears and ends at the time it is closed.
The interest rate on deposits may vary depending on the type of deposit or its conditions. Profit can be capitalized with the rest of the contribution or paid to the client after a certain time (monthly, once a decade, at the end of the placement period, etc.).
Speaking about the life of deposits, you can divide them into two types:
- perpetual;
- urgent.
If everything is clear with the first “demand” type, then the second type of deposit implies the conclusion of an agreement for a certain period of time.
Time deposits can be:
- short-term (less than a year);
- medium-term (from 1 to 3 years);
- long-term (from 3 years).
A client with a fixed-term deposit can withdraw his money at any time, having lost interest. For the convenience of their customers, many banks offer a service for assigning individual terms of a deposit acceptable to the consumer.
Deposit Security and Insurance
Deposit insurance means that in the event of a bankruptcy of a financial institution, the depositor will receive a certain amount of money, which is a percentage of the total investment, on time.
Insurance payments are made by special state funds or the banking system.
Features for the Russian Federation
Russia has passed a law that controls the activities of banks and protects the rights of consumers. Therefore, in the event of a conflict between the parties, all issues will be considered in court. This law is called “On Insurance of Individuals' Deposits with Banks of the Russian Federation” of 2003. More generally, each bank that insures a deposit is a member of the insurance system. Therefore, in the event of bankruptcy of a financial institution, the state will return to depositors up to 1 million 400 thousand rubles.
Also on the territory of the Russian Federation, all commercial banks are obligated to transfer to the Central Bank a part of the funds deposited for deposit to form a reserve system.
If the company cannot open a deposit, then a bill of exchange is drawn up on it (a veiled deposit for some companies and enterprises).
