Saving in times of inflation and high interest rates: deposits are on the rise

In October, deposits by individuals with banks totaled 182.1 billion, more than in September and in the same period of the previous year.

The response of Portuguese families to the high inflation rate and the increase in interest rates by the European Central Bank (ECB), which is contributing to the increase in Euribor rates and, consequently, in the provision of mortgage loans, seems to be given . The total amount of housing loans granted to individuals is slowing down and, at the same time, deposits are increasing, in what will be a way of trying to increase savings. 

The data released this Monday (November 28, 2022) by the Bank of Portugal (BdP) confirm this trend. According to the supervisor, at the end of October, deposits by individuals with resident banks totaled 182.1 billion euros, having increased by 0.8 billion euros compared to September and 7.0% compared to the same period of the previous year. It is, moreover, the second highest year-on-year increase, just behind the month of July (7.2%).  

“At the end of October 2022, sight deposits and time deposits (which include deposits with an agreed term and deposits at notice) represented, respectively, 49% and 51% of the total amount of deposits”, reads up in the BdP bulletin . 

The entity led by Mário Centeno , former Minister of Finance, adds that since the beginning of the year, demand deposits made by individuals have increased by 6.9 billion euros. “This increase was, however, lower than that observed in the same period of the previous year (7.3 billion euros). Time deposits have increased by 2.3 billion euros since January 2022, surpassing the value observed in the same months of 2021 (0.5 billion euros)”, he concludes. 

Putting savings in a term deposit how much does it yield? 

Putting savings in a term deposit yields 1.44% in the Netherlands, 20 times more than in Portugal. Data for August show that the interest rate on time deposits in Portugal was 0.07%, the third lowest in the European Union (EU).

As we wrote in this article , in October, the tendency to put savings in the bank to yield was lost, especially in Portugal, where interest rates on time deposits have been below 0.50% since December 2015, according to BdP data.