Deposits Guide: Types, Benefits, and Selection Tips
Deposits are one of the securest ways to save and multiply your money, offering stability and minimal risks. In this publication, we will discuss in detail what deposits are, their types, advantages, and disadvantages, and also give useful advice on choosing the right option for your financial goals.
What is a Deposit?
Deposit means money passed to a bank for a certain period or indefinitely, in exchange for a fixed income earned in the form of interest. Unlike investment in shares or bonds, deposits guarantee the return of invested funds and a stable income. This makes deposits a popular tool for saving and increasing funds.
Most deposits are insured by the state. For instance, in Kyrgyzstan, deposits amounting up to 1,000,000 soms are protected by the Deposit Protection Agency. This ensures more depositor confidence in the safety of their savings. You can learn more about the deposit protection law on the NBKR website.
A deposit is not only a way to save money, but also an opportunity to ensure financial stability in the future. Thanks to the variety of bank offers, everyone can find a suitable option that meets their needs.
More about Deposit Insurance:
Deposit insurance is a system that protects people's deposits in the event of a bank's bankruptcy. In Kyrgyzstan, as in many other countries, there is a mandatory deposit insurance system. This means that if the bank where you placed your deposit goes bankrupt, you will be paid compensation within the established limit.
How Does the Deposit Insurance System Work?
Member banks of the deposit insurance system regularly make contributions to a special fund.
This fund is formed of bank contributions and used to pay compensation to depositors in the event of a bank's bankruptcy.
The amount of insurance indemnity is set by the government. In Kyrgyzstan, as was already mentioned, this amount is up to 1 million soms.
Benefits of the Deposit Insurance System:
Protection of people’s deposits against losses in the event of bank bankruptcy.
More confidence in the banking system.
Ensuring financial stability in the country.
It is important to remember that the insurance indemnity amount is limited. If your deposit exceeds the established limit, you may lose part of your funds in the event of bankruptcy of the bank.
Types of Deposits
There are many types of deposits, each one suitable for different purposes and user categories. Let's consider the main types and their features:
Money Box Plus
This deposit allows you to manage your funds via the My O! superapp. You can regularly put small amounts in without visiting the bank office.
Terms:
Find current interest rates on the Money Box Plus deposit page.
Unlimited top-ups.
Monthly interest payments.
Minimum deposit amount: 1,000 KGS/USD10/10 EUR
Period: 3 to 24 months.
Advantages: user-friendly controls, regular top-up option without limits, and monthly interest payments.
Example: You want to save money for a new phone. You can put small amounts into the Money Box Plus deposit and have enough money for a purchase in the end.
Basic Plus
Flexible and secure deposit that allows not only saving money but also multiplying your savings.
Terms:
Find current interest rates on the Basic Plus deposit page.
Partial withdrawal, not more than once per month.
Interest payment in the deposit period.
Minimum deposit amount: 15,000 KGS/USD 200.
Period: 3 to 18 months.
Advantages: unlimited deposit top-ups and partial withdrawal options make this deposit flexible and profitable.
Example: You are saving money for your apartment renovation. Open the Basic Plus deposit and top it up regularly. If you need money urgently, you can withdraw a part of the amount without losing your interest.
Advantages of Deposits
Let’s talk about the advantages of deposits:
Security
The government deposit insurance ensures protection of your funds subject to the established limit, e. g. in the event of the bank’s bankruptcy.
Fixed Income
You know in advance how much you will get by the period's end. This allows you to plan your finances and prevents unexpected losses. Use the deposit calculator to estimate the profit you can get from each deposit type.
Example: You intend to buy something large in a year. Open a deposit with a fixed interest rate so that you can estimate exactly how much money you will have by that time and plan your expenses.
Easy Process
Most banks offer opening deposits not only at their offices but online as well, making the process as easy and quick as possible.
Online banking: State-of-the-art solutions make it possible to open a deposit via a mobile app, without leaving home.
Minimum set of documents: Normally, a minimum set of documents is required for opening a deposit.
Quickness: It only takes a few minutes to open a deposit.
Flexible Terms
Some deposits include options such as account top-ups, partial cash withdrawal, or even early contract termination without losing the interest.
Top-ups: The regular top-up option allows increasing the savings and earning a higher income.
Partial withdrawal: Some deposits provide withdrawal of a part of the amount without losing the interest, an option that may be useful in some unexpected circumstances.
Early termination: In some cases, the deposit contract may be terminated early with minimum interest loss.
How to Choose a Deposit?
The right choice of deposit depends on your goals, financial capabilities, and preferences. Here are some practical recommendations:
Identify the Purpose of the Deposit
Ask yourself: what do you need a deposit for? For saving money or earning additional income? For example:
The Savings Deposit will be useful for saving money for a large purchase.
The Income Deposit allows earning a regular income.
The pension Deposit will ensure financial stability in the future.
The Children’s Deposit allows saving money for children’s education.
You can open the Basic Plus deposit to create a “cushion” for unexpected circumstances.
Compare Deposit Types and Terms
Compare deposit types and terms on the O!Bank website. Focus on:
interest rates;
top-up and withdrawal provisions;
deposit period;
minimum deposit amount;
bank’s reputation and availability of a banking license;
deposit insurance provisions;
additional services such as online banking or a mobile app.
Use the Deposit Calculator
The deposit calculator will help estimate the income. Select the deposit type, enter the deposit amount, period, and interest rate to find out how much money you will have in the end.
Recommendations for Specific User Categories
New users: Beginners better choose basic deposits with a fixed interest rate as they are easy to understand and do not require in-depth knowledge. For instance, the Money Box Plus deposit will be suitable for the first deposit as it has the regular top-up option.
Experienced deposit holders might consider opening deposits with more complex terms, such as the option of early withdrawal with interest saved or interest capitalization.
Students who want to save money for education or other purposes can open savings deposits with the regular top-up option.
More Tips
Read the contract carefully. Before signing the contract, make sure you understand all its terms and conditions, especially those related to interest rates, periods, early withdrawal penalties, and other important aspects.
Keep an eye on inflation. Consider the inflation rate when choosing a deposit. The interest rate should be higher than inflation so that your savings do not depreciate.
Conclusion
Deposits are not just a method of saving money, but also a tool for increasing it. Choosing a deposit is an important decision that depends on your financial goals and capabilities. Compare offers, use the deposit calculator, and carefully read the contract terms. If necessary, seek advice from specialists.
