HomeFITNESSTime deposit interest rates start to rise

Time deposit interest rates start to rise

Find out the impact that rising interest rates have on your money. Find out and compare interest rates on term deposits.

The increase in interest rates announced by the ECB is having an impact on mortgage loan installments, but also on savings, especially on Savings Certificates which, as they are indexed to the 3-month Euribor, are reacting immediately to the change in interest rates.

The impact of this rise in interest rates, on the other hand, had no effect on time deposits, but since October 2022 the scenario has been changing. If in September 2022, interest on most deposits yielded less than 1%, today the values ​​​​are already quite different.

It should be recalled that while the Euribor was negative, passive interest rates, such as term deposit interest rates were unattractive, which could reduce the motivation to save. With the rise in interest rates, the profitability of these deposits tends to increase, but never as significantly as the profitability of Savings Certificates.

In any case, and as time deposits are the savings product of choice for the Portuguese, it is advisable to follow the evolution of interest rates on time deposits, even to understand how you can make the most of your savings.

Interest rates on time deposits: what you should know?

Passive interest rates are, in essence, the remuneration you receive from the bank for having your money in that account for a certain period. Contrary to what happens with current accounts, which serve to transfer money, in time deposits the idea is that the capital is immobilized.

The longer the period, the higher the interest rate is generally. That is, the longer you have the money in a deposit, the more your savings grow. If there is capital mobilization during the contracted period, there is a penalty. That is, it loses interest.

Term deposits have another advantage: up to 100 thousand euros are covered by the Deposit Guarantee Fund. Which means that in the event of a bank failure, your money is safe.

Please also note that interest on bank deposits is subject to tax. That is, the so-called withholding tax (in the amount of 28%) is applied. This amount is deducted by the bank before paying interest. In certain cases, it makes sense to include this income with the rest when submitting the IRS return.

How to compare interest rates on time deposits?

Before choosing a term deposit, you can and should compare the conditions offered by different banks.

However, keep in mind that you should compare for similar conditions. That is, check, for example, the interest rates for several deposits in the same term and with the same mobilization conditions.

You should also take into account any fees that each banking institution charges. To compare you can use the Bank of Portugal commission comparator.

There are also cases in which the conditions only apply to those who are already bank customers and others in which you may have to subscribe to other products. Some banks have deposits with attractive rates as a way to attract new customers.

In order to be able to compare and get an idea of ​​the interest rates charged on term deposits, we have selected the options with the most interesting rates, taking into account a consultation made on January 19, 2023. However, and also because there are promotional offers, it is important that you confirm, with the banks, the products they have available at the time you want to contract your deposit.

3 month deposits

Time deposits with interest rates equal to or greater than 1% were selected.

Bank Deposit amount
minimum (€)
TANB (%) TANL (%)
Best Bank DP New Customers 2,500 2.25 1.62
BAI DP New Customers 2,500 2.50 1.80
Atlantic Bank Europe Term Deposit Welcome 500 1.00 0.72
BIG Super Deposit 500 2.00 1.44
Banco Carregosa Term Deposit Banco Carregosa Welcome 25,000 2.00 1.44

6 month deposits

12 month deposits

Deposits for a period of 2 years (24 months)

Deposits for 3 years (36 months)

5 year deposits (60 months)

Article originally published in March 2021. Last updated in January 2023.

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