As inflation continues to take hold and melts citizens’ money savings like ice cream in the hot summer sun, Bigbank Latvija is calling on other banks to meet their customers and raise the deposit interest rate by personal example. Bigbank Latvija has already grown to 3% per year.
As the prices of consumer goods rise, residents not only have to spend a larger portion of their monthly income on paying bills, food and other expenses, but also watch their savings become worthless. For example, in May, the monthly inflation in Latvia had already reached 4%.
“In conditions of high inflation, the most reasonable action is to invest savings so that money produces more money. The scenarios are different – from investing funds in companies or creating new businesses to operating on the stock market. However, the simplest, non-active and safest way is to choose a term deposit with a fixed interest rate. By concluding an agreement with the bank, the client receives a guarantee that he will receive the promised amount at the end of the agreement term, regardless of market and economic events. All Bigbank Latvija customer deposits are protected by the Estonian Guarantee Fund, and they are secured and compensated in accordance with the Law on the Guarantee Fund. According to it, every depositor can recover a deposit of up to 100,000 euros in the amount of one hundred percent,” emphasizes the head of Bigbank Latvija Edgar Surgoft.
By depositing money in Bigbank Latvija, the client can choose the most advantageous interest payment method – monthly, annual or one payment at the end of the contract term. In addition, the bank undertakes not to change the interest rate during the entire term of the contract, even if the market situation changes. Namely, even in deflation conditions, the customer’s deposit will continue to earn money according to the terms of the transaction.
It is significant that before the 2008 crisis, term deposits were quite popular in Latvia and a large number of people increased their capital in this way. But in the post-crisis period, universal banks weaned their customers off this way of making money by offering almost zero interest. As a result, citizens and businesses simply keep money in a bank account and do not put it to use. The data published by the Financial and Capital Market Commission (FKTK) show that on December 31, 2021, the amount of deposits of domestic households in Latvian banks reached 9.833 billion euros, and the amount of deposits of domestic non-financial companies – 6.08 billion euros. Thus, there are around 17.613 billion euros in bank accounts, which are gradually being “eaten” by inflation.
Bigbank
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