How Much Can You Earn on a Deposit? Practical Calculations

One of the key trends in the deposit market in the near future will continue to be depositors’ desire to combine attractive returns with the flexibility to access and manage their savings when needed.

This was stated by Dmytro Zamotaiev, Director of the Retail Business Department at GLOBUS BANK.

The expert noted that when assessing the benefits of a bank deposit, it is important to consider not only the advertised interest rate, but also taxes and inflation.

As of the end of October, average interest rates on hryvnia deposits stood at 14% per annum for 3-month deposits, 14.5% for 6-month deposits, around 15% for 9-month deposits and 14.3% for 12-month deposits. At the same time, depending on the deposit term, the highest rates reached 17.2% per annum for 3-month deposits, 17.25% for 6-month deposits, around 17.1% for 9-month deposits and 17.5% for 12-month deposits.

Taking UAH 100,000 as an example and assuming that interest is paid at the end of the term without capitalisation, the calculations, taking into account the 18% personal income tax and 5% military levy, would be as follows.

With a 3-month deposit at 14% per annum, the depositor would earn UAH 3,500 in accrued interest, or UAH 2,695 in net income after tax. At the maximum rate of 17.2%, the accrued interest would amount to UAH 4,300, with net income reaching UAH 3,311.

With a 6-month deposit at 14.5% per annum, the accrued interest would amount to UAH 7,250, of which the depositor would retain approximately UAH 5,583 after taxes. By comparison, at the maximum rate of 17.25%, the depositor could earn UAH 8,625 in accrued interest, or approximately UAH 6,641 in net income.

A 12-month deposit at 14.3%, in turn, would generate UAH 14,300 in accrued interest, or UAH 11,011 in net income. At the maximum rate of 17.5%, the accrued interest would amount to UAH 17,500, of which the depositor would actually receive UAH 13,475.

These calculations are indicative, as the actual amount of income will depend on the exact deposit term, the terms of the deposit product and the interest calculation method. In addition, the highest rates may be subject to special conditions for opening a deposit.

“In my view, the next six months could be quite favourable for placing funds in hryvnia deposits with terms of 3 to 6 months. On the one hand, the key policy rate is expected to remain high for an extended period, supporting deposit returns. On the other, the anticipated gradual slowdown in inflation could increase their real value. At the same time, depositors will be able to review their savings strategy after a relatively short period. This is therefore not only about the opportunity to earn interest, but also about maintaining financial flexibility amid wartime uncertainty,” emphasised Dmytro Zamotaiev.