About the Bank Deposit

A bank deposit or deposit is one of the simplest and most popular ways to save and multiply the savings of the population. Before investing their money in a particular bank (or not a bank), each investor must know the basic minimum of financial information relating to the work of banks with deposits.

Deposits of banks are obliged to accept only on the basis of the Bank Deposit Agreement , drawn up in writing. It should be borne in mind that, in accordance with Russian legislation, a deposit of a savings (deposit) book, a savings certificate (deposit certificate), or another document certifying the contribution, if it meets the requirements of the law, is also equal to the bank deposit agreement concluded in writing.

Only banks that have undergone special inspection and are included in the deposit insurance system in the Russian Federation have the right to attract money from the population to deposits. Inclusion of the bank in the deposit insurance system means that in the event of bankruptcy of this bank, the depositor can be guaranteed to receive the amount of his deposit (but no more than the limit established by law) when applying to the state non-profit organization "Deposit Insurance Agency".

Information concerning the deposits of the population is a banking secret that is not subject to disclosure, except in cases established by law.

The bank accrues interest on the deposited amount by the depositor in the manner and amount established by the terms of the contract. As a rule, it is the size of the interest paid that is decisive when choosing the contribution of a particular bank. The bank deposit contract always indicates the annual percentage, i.e. What amount "will grow" to the amount of the contribution for the year. Calculation of the amount of interest for the period is made using the simple interest formula:

Interest = S X% x P / 365 (366) x 100%, where

S is the sum of the contribution

% - annual percentage specified in the contract

P - the period (period) of the contribution in days

365 (366) - number of days in a year

The terms of the contract may provide for:

• Periodic (monthly, quarterly, etc.) receipt of interest;
• Receipt of interest at the end of the deposit period;
• Capitalization of interest (the calculation of interest to the amount of the deposit with a certain periodicity (once a month, once a quarter, etc.)).

The periodic receipt of interest is convenient if a person plans to live on interest. The deposit amount, remaining untouched, provides its owner with periodic income.

Obtaining interest at the end of the term is beneficial if you need to save a certain amount, especially since the interest on such deposits is usually higher.

Deposits with a capitalization of interest are also beneficial for accumulation. After all, interest, which will be periodically reckoned with the amount of the deposit, will also be accrued, thereby increasing the real interest rate claimed in the contract.

It should be remembered that the size of interest rates set by banks on deposits is not accidental and is not taken "from the ceiling". The banks involved in deposits invest in active operations (issuing loans, for example) in order to obtain profit. Therefore, the amount of interest on deposits depends in each bank on the level of the bank's profitability for active operations, including the level of interest rates on loans issued by this bank.

In this regard, it is worth considering if the proposed interest on your deposit is 2-3 times or more higher than the current refinancing rate. What kind of operations will the bank be able to ensure the payment of such high interest, and still get a profit at the same time? In this case, the bank or conducts a highly risky policy (ie, puts your money into risky operations), or you are dealing with a typical financial pyramid.

You should also know that in accordance with the legislation of the Russian Federation, interest received by an individual on deposits in a bank is subject to personal income tax (Personal Income Tax) at a rate of 35%. Personal income tax on deposits is charged by banks:

• For deposits in rubles: from the difference between the amount of interest accrued under a bank deposit agreement and the amount of interest calculated on the basis of the current refinancing rate increased by 5 percentage points;
• On deposits in foreign currency: from the difference between the amount of interest accrued under the contract bank deposit and the amount of interest calculated on the basis of 9% per annum.