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Czechs show preference for savings accounts, but interest rates will decrease

Banks took a long time to react to the interest rate rise introduced by the Czech National Bank, and raise rates on savings accounts as well. However, according to Lubor Žalman, the ex-banker and renowned financial adviser, high interest rates on savings accounts will not last long.

For the Czechs, savings account is a favourite option how to protect savings against inflation. The total amount of funds deposited in savings accounts reaches 220 billion crowns. Savings accounts are basically risk-free, but they also have one major drawback.

"There is no guarantee that the high interest rate will last long. The bank can decrease it the very next day," warns Lubor Žalman, former CEO of Raiffeisenbank and founding partner of the EnCor Capital Management investment group.

According to Žalman, interest rates for savings accounts reached their maximum and will gradually decrease during the next year. Yet, the highest current rates available on the banking market do not even reach half of this year's expected inflation rate.

According to the survey made by Seznam Zprávy, the highest interest rate on a savings account - namely 6.5% per year - is offered by Oberbank. However, additional conditions (such as a minimum and maximum deposit amount) must be met for this rate to apply. Also in other banks, attractive interest rates are available only if various conditions are met - for example, they are offered only to new customers, or the clients are obliged to make several card payments per month. The highest interest rate on a savings account that incurs no additional conditions, is offered by Všeobecná úverová banka (6.15% p.a.) and Max banka (6.01% p.a.).

"The competition between the banks is apparent. If they want deposits, they have to come up with interesting conditions", comments Žalman the offer of Czech banks. He would not be afraid to entrust the funds to a smaller bank. The CNB's supervision of the banking sector is relatively sophisticated, and the EU deposit insurance scheme also works reliably, while covering deposits up to EUR 100,000.

According to Žalman, anyone making investment decisions should take into consideration the future inflation rate, not the current one. While renowned institutions estimate next year's inflation rate at 9%, Žalman expects it to be one to two percentage points lower.


Seznam Zprávy (22.12.2022)


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