Interest Rates on Deposits Cut to Record low

Interest rates on deposit accounts reached record low levels. In the last month, mortgage interest rates have also been seriously declining according to statistics by the Bulgarian National Bank, published at the end of the week. Economists advise that personal finances should be managed wisely and that money be invested in accessible instruments.

There are two main reasons for a record drop in interest rates. On one hand, this is the policy of the European Central Bank to maintain low cost for deposits and loans, and on the other hand, the accumulated funds in the banks themselves.

This in practice means that they have enough money and do not have the intention of collecting more deposits. The base interest rate at the beginning of July remains 0%.

Thus, the average interest rate on deposits on corporate interest rates already reached 0.18% in BGN.

The cost of household deposits decreased to 0.44% in BGN and 0.30% in EUR.

There is also a decrease in the profit from quick deposits - up to one day.

Stoyne Vassilev, Chairman of the Bulgarian Association of Personal Financial Consultant,s says that there are over 46 billion BGN of households in the banks, which shows that the Bulgarians love to save. The point is that this does not bring any great return at the moment. Interest rates on bank deposits are at the lowest possible level historically and they are slowly eaten up by inflation. Managing your money more wisely is knowing what to invest in. Investing is to split up with an amount of money now to make more money in the future. There are many affordable investments that anyone can make, even spending 200 or 300 BGN per month. These inclues shares, mutual fund shares, life insurance with saving element. The products are many and they are available, he said.

There is also a decrease in interest rates on loans. Consumer loans average cost 7.78%. And the cost of housing loans is already under 4%.

Low return on deposits logically leads to more spending because people have no incentive to save. Such decisions, however, must also be reasonable. July and August are the months in which Bulgarians spend the most money, data from financial consultants show.

According to the experts, in order to fit in the monthly budget, every person should have a daily spending threshold and should go beyond it only if needed.

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