Infographic on how to invest in bank deposits

Interested in investing in bank deposits?

Bank deposits are a form of medium- and long-term savings where the interest rate varies according to the balance of the deposit and the length of time it is held.

Individuals deposit their own money with a financial institution, which in turn holds the funds and repays interest. This interest is paid until the end of the agreed period or until the client fulfils the conditions required by the organisation.

Are you interested in investment deposits? Although banks currently offer very low yields on deposits, they can be a very good option, especially to reduce the negative impact of inflation on your savings. If you are one of these people, please consider it.

You have an image of being a conservative investor.
✔ You are more concerned about security than income.
✔ You are looking for a certain return, even if it is low.

The difference between a deposit and an interest-bearing account: which one to choose?

Both are forms of long-term savings, but there are some differences between an interest-bearing account and a bank deposit.

The main difference between an interest-bearing account and a term deposit is that a term deposit has a fixed term (e.g. one, three or five years), while the funds can be withdrawn when needed.

There are also different repayment options: interest-bearing accounts can be paid monthly, quarterly, semi-annually or annually, while term deposits (the most common) are paid to the customer only at the end of the term. Some other types of payments are made on a regular basis.

Another difference is the maximum balance payable and the terms of the agreement. Interest-bearing accounts tend to have lower balances than deposits. In addition, they require more conditions than deposits, such as being in receipt of a salary.

Which one should you choose? If liquidity is important to you, an interest-bearing account is the best option, as it offers a certain return and can be used for various banking activities. On the other hand, if you do not need the money immediately, a high-yield bank deposit is a good option for making a profit.

How much money can I earn with a bank deposit?

Currently, you can earn up to 1.17% annual interest on your deposits. Specifically, this return is offered by J&T Bank on the Raisin platform for 60 months. As you can see, this return can only be achieved over a longer period. In this case, five years.

Let’s look at an example to see how much you could earn if you invest in a deposit for a more typical period of 36 months (3 years).

  • You have 30,000 euros deposited in a bank term deposit.
  • Deposit term: 36 months
  • Yield is 1% p.a. / INR
  • Interest is paid in instalments.

If you choose this option, after 3 years (36 months), you will get back the extra 30,000 euros and a profit of 900 euros, a total of 30,900 euros. This means that

30,000 euros x 1% NIR x 3 years = 900 euros fixed interest on your original investment.

Interest rate on deposits

Demand deposit

So-called demand deposits can be withdrawn or deposited at any time without prior notice or penalty to the contracting financial institution. However, they generally do not generate a profit. A current account is a type of demand deposit.

Time deposit.

The most common type of deposit. These are funds that are invested for a fixed period of time and earn interest. The repayment term is set by the bank and is usually priced so that the longer the term, the higher the interest rate.

If you try to withdraw your money before maturity, the bank is likely to penalise you.

Structured deposits

They are similar to term deposits, but with a different term. The main difference between the two is that a structured or variable deposit does not guarantee a constant return: it depends on the evolution of the financial asset. This is because part of the money is invested in the financial market to obtain that return. However, although term deposits are not as safe, they can have higher interest rates.

How to choose the best bank deposit

The basics: use our deposit comparison tool to choose the deposit that best suits your needs, including maturity and yield. And here’s a list of things to consider when choosing a deposit.

Objective and financial needs

Bank deposits are a financial product designed for the most conservative savers. As they do not invest in money market assets, they are a risk-free long-term savings formula (with the exception of variable rate deposits and structured deposits).

However, this low level of risk is also reflected in the rewards, which are lower than those of other investment products.

This product is suitable for individuals who wish to increase the return on the uninvested portion of their savings and protect their assets in the event of inflation.

Minimum and maximum investment amounts

When investing funds in medium- and long-term savings products, most financial institutions require a minimum amount to reward the customer. In the case of deposits, financial institutions usually set a minimum amount of between 5,000 and 10,000 euros (although in some cases it can be as low as 1 euro).

The maximum amount varies considerably from bank to bank. Some cannot exceed 100,000 euros, the amount guaranteed by the Deposit Insurance Fund, while others extend it further.

Permanent and early withdrawal

Before making a deposit, it is important to pay attention to the duration of the deposit. As the name implies, a term deposit stipulates that the funds cannot be used for a certain period of time.

In return for this permanence, only in most cases will you receive a payment at the end of the deposit period. In other words, the longer you keep your savings, the higher the bonus the bank will offer you.

Another important thing to check before signing a deposit contract is whether there is an early termination option. This means that in case of unforeseen circumstances or emergencies, you will be able to withdraw your funds. Of course, the organisation usually has penalties in place for such an eventuality, such as the cancellation of the customer’s bonus.

Renewal option

If you want to deposit part of your savings for a long time, you can choose the rollover option, provided that the product institution with which you have a contract allows rollover.

It is therefore important to check whether the bank offers an extension option and under what conditions. In some cases, the bank will pay the interest on the loan when it matures. In other cases, however, the interest will continue to accrue on the next deposit until the maturity date of the last product you have chosen.


Interest on long-term savings products, such as interest-bearing accounts and bank deposits, is subject to personal income tax as a capital gain on the basis of savings taxation.

Interest is normally paid at maturity, at which time the tax authorities are obliged to withhold tax.

The following tax rates currently apply

  • 19% on savings up to 6,000 euros.
  • 21% on savings between 6,000 and 50,000.
  • 23% for savings between EUR 50,000 and 200,000.
  • 26% if you have savings of more than 200.000

How do I sign up for a bank transfer?

You can make a deposit directly with the institution that manages your deposit, either at a branch if you have one, or online if you do not. You can also do it through an intermediary such as Raisin.

Raisin is a digital intermediation platform that helps you receive your deposits from European banks. It does not manage your money, but acts as a “bridge” between you and the bank.

It is required as a deposit agreement.

A national identity card or a valid identity card.

Proof of professional activity. However, there are also entities that provide “independent” advice through the TGSS.

A bank account. For example, if you deposit with a sultana, you will have to open an account there and all interest will be credited to this account.

Can I take out a deposit abroad?

Of course you can. With Raisin and Finnecto you can. As mentioned above, Raisin Spain only works with EU banks and most of them have an online registration.

However, please note that if your contractual deposit exceeds EUR 50,000, you will have to notify the tax authorities that you have assets in a foreign bank. In this case, you will need to file form 720.

Are your deposits insured?

Bank accounts and deposits are insured by the Deposit Insurance Fund, which operates throughout the EU. It provides cover in the event of the failure of a member financial institution for demand, savings, interest-bearing and time deposits.

The DGF operates at the European level, but each country has its own fund with its own laws and conditions. In the case of the Spanish Deposit Guarantee Fund, as in many EU countries, the maximum amount is 100,000 euros per depositor.

In addition, all banks, savings banks and credit cooperatives are obliged to join this fund to guarantee their customers’ money in case of bankruptcy of a financial institution.

Are bank deposits in other countries just as safe?

Yes, deposits from other countries can be safely processed through Raisin.

Please note that the interest-bearing account is the Raisin account at Keytrade Bank, the Belgian branch of Arkéa Direct Bank SA (France). The French deposit insurance fund, like the Spanish fund, protects all depositors up to a maximum of €100,000 per institution.

Advantages and disadvantages of making a deposit

Now that you know that it is important to consider the various points and your interests as an investor when entering into a deposit contract, it is also important to highlight the advantages and disadvantages.

Advantages of the deposit

  • Pay only a custody fee for the money deposited in your bank account.
  • That it is a very easy financial product to conclude.
  • The different conditions allow you to choose the one that suits you best.
  • Know in advance the performance to be achieved.

Disadvantages of deposits

  • Lack of liquidity, since if you withdraw the deposit you are obliged to keep it for a certain period of time. Withdrawing early may result in penalties.
  • Low interest rates, set by the European Central Bank, tend to reduce profitability.
  • Taxes: If the bank pays interest, it will have to pay the corresponding taxes at source. Generally, the profit earned will be included in capital gains. It will be added to your other income for the year and taxed as savings income.

Here you can see how to prevent your bank from charging you more fees for your deposit.

Can I cancel my deposit? How?

Yes, in most cases it is possible to cancel an advance payment. The procedure is basically simple: just contact the agency or intermediary directly, or contact them online (depending on the agency) and request the early cancellation.

However, we recommend that you first consider the following points, including the penalty for early cancellation

  1. read the contract, with its conditions and cancellation policy, to know what will happen if you cancel early There are still some (very few) banks that do not allow cancellations, reduce or completely discount the amount you receive, or do not penalise you if you cancel.
  2. Know how long it will take to repay the loan (approximate).
  3. If you have to cancel early because you need the money, think carefully: is it worth it, even if you have to pay a penalty? Is there another way to get the money I need without having to spend my savings?
    Is there a more profitable deposit than mine?
    The amount of deposit rewards varies according to the organisation and the time of year. Currently, you can find deposits with a return of 0.10% for 6 months and 1.17% for 60 months in several European financial institutions. For this reason, it is important to stay informed.

If, at the end of the deposit period, you wish to maintain or increase your yield, you can easily transfer it to another deposit.

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