Russians massively took money to banks: “Logical behavior”

The growth of the key rate spurred public interest in ruble deposits

The Central Bank’s tightening of its monetary policy, or rather the increase in the key rate to 15%, led to a logical result: Russian banks increased their own rates on deposits. The Russians did not ignore the appearance of a more favorable interest rate and hastily took money to credit institutions: in recent months, household deposits in a number of large domestic banks have increased by 1.5-2 times. It is obvious that people are taking advantage of the opportunity and trying to squeeze the maximum profit out of their savings, preferring to keep funds no longer “under the pillow” or in a currency that has become “toxic”, but to put money aside on deposits that are now earning good interest.

The volume of ruble deposits in domestic banks for ten months of 2023, according to the Central Bank, increased by almost 2.6 trillion rubles. Over the past two months alone, in some credit institutions included in the TOP-20 domestic financial organizations, household deposits have increased by 65-75%. In November – December, judging by preliminary banking data, the amount accumulated in the accounts of individuals promises to grow by about another 1 trillion.

The reason for the record deposits of citizens lies on the surface: since July, the Central Bank has doubled the key rate – from 7.5% to 15%. Following this, Russian banks increased their interest rates on deposits. Now, according to the regulator, the average maximum rate on deposits of individuals has reached 13.64%, although in mid-summer it barely exceeded the threshold of 8%.

Such noticeable interest of the population in the most accessible banking instrument was observed even last spring, when the Central Bank raised the key rate from 9.5% to 20%. Experts explain this paradox by the fact that then the indicator was increased at a time, but now the regulator increased the rate gradually – the current level was reached after four meetings of the Board of Directors of the Bank of Russia. Accordingly, people, even those far from the world of finance, had time to think about and evaluate the possibilities of profitable investment of their hard-earned money.

How wisely do Russians act when increasing savings on deposits in banks, and which of them should be preferred, explained financial analyst, Candidate of Economic Sciences Mikhail Belyaev.

– Can the current behavior of Russians, massively transferring their savings to banks, be considered logical?

– Absolutely logical and correct behavior, which fully fits into the theory of financial relations between the state and the population. The increase in the Central Bank’s key rate provoked an increase in bank interest rates, which immediately attracted people to make deposits.

– Which deposits should you give preference to?

– In the classical scheme, it is believed that the greatest profit can be made by making long-term deposits. Now higher interest rates are offered on short-term deposits. This suits both banks, who are not sure that the current conditions will drag on for a long time and do not want to bind themselves with additional obligations, and the population, whose savings are practically always at hand.

The combination of a high rate and a short investment period for people with modest incomes and not very financially savvy is the most profitable and convenient option. The only thing that is required is that you need to more carefully monitor your deposits: do not miss deadlines for re-issuing deposits, and if the conditions offered by banks worsen, refuse the services of a credit institution in a timely manner.

– Which banks can you trust with your hard-earned money now? Should you get involved with small, unknown financial institutions that offer high interest rates?

– It doesn’t matter at all who you entrust your savings to. In any case, the depositor’s funds are insured for 1.4 million rubles. That is, if the investment does not exceed this amount, then the money will be returned. If any bank offers a higher interest rate, then you should not be afraid of such an organization. A credit institution that is not a participant in the deposit insurance system simply does not have the right to work with public funds. In the most extreme case, if such a bank cannot withstand the financial burden and its license is revoked, then the client will still return his funds. Cash deposits are hedged by the Deposit Insurance Agency. This state organization has a fund at its disposal, into which banks included in the insurance system make quarterly contributions (depending on the size of investments). Another thing is that the investor will not get the promised interest back, but such is life: increased profits are always associated with greater risks.