“Don’t chase the highest rate”: Banker outlines the key rules for choosing a deposit this autumn

As the deposit market picks up in autumn, depositors should not choose a bank solely on the basis of the highest figure in an advertisement or put all their savings into a single fixed-term deposit.

This is the view expressed by Dmytro Zamotaiev, Director of the Retail Business Department at GLOBUS BANK.

According to him, the first thing to compare is not the nominal interest rate but the net return on deposits after tax. For example, a six-month deposit at an annual rate of 17.5% would generate a net return of approximately 6.74% of the amount deposited after tax.

The second important criterion is the terms and conditions of the deposit. Before opening an account, it is worth checking whether early termination is permitted, whether additional funds can be deposited, how interest is paid or capitalised, and whether automatic renewal applies.

In addition, some savings should remain readily accessible to cover unexpected expenses. For this reason, the expert advises against placing all available funds in fixed-term deposits.

For larger savings, one option is to divide the funds among deposits with different terms. For example, some money could be placed in a three-month deposit, some in a six-month deposit, and the remainder in deposits with terms of 9–12 months. This makes it possible to access part of the financial reserve periodically.

Depositors should also compare the expected net return with their own assumptions about inflation and the exchange rate, rather than making decisions solely in response to currency fluctuations.

“A hryvnia deposit should not be the only way to hold all your savings, but it remains one of the basic tools of financial planning. Its main advantages are predictable returns, a clearly defined term for placing funds, the state deposit guarantee system, and the ability to lock in an interest rate for several months,” said Dmytro Zamotaiev.

In his view, it is particularly important in autumn not to let the pursuit of the highest interest rate replace sound financial planning.

“The main rule is simple: don’t try to ‘guess’ the exchange rate or rush after the highest figure in an advertisement. Instead, calculate the net return and choose a deposit that meets your own needs,” the banker concluded.