Savings accounts in the Czech Republic are offering interest rates of up to six percent per year, according to a recent report. However, the majority of these accounts only offer such rates on a portion of the deposit, making it difficult for savers to earn significant returns in the face of high inflation. The Czech National Bank’s base rate has remained unchanged at 7 percent since June 2021, and despite some minor exceptions, interest rates on savings accounts have remained steady since the autumn of 2021.

Savers in the Czech Republic are grappling with a rapidly depreciating currency, as inflation has remained above 15 percent since March 2022. According to Lukáš Urbánek, a financial advisor at Partners Group, savings accounts are primarily a tool for banks to gain sufficient deposits to lend to others, and the conditions on these accounts are constantly changing, making it difficult to predict how interest rates will evolve.

Each bank in the Czech Republic offers a savings account, often in several variations. However, accounts that pay favorable interest rates on deposits above half a million Czech koruna are relatively scarce. Despite this, savings accounts remain one of the most popular deposit products among Czech households. The account setup is free, and holders can access their money anytime.

During the last six months, most banks have not changed their interest rates, and according to their representatives, they do not currently plan to do so. As a result, annual interest rates typically range from 5 to 6 percent. Banks only pay interest on a portion of the deposit or require clients to meet certain conditions such as active use of a current account, online account setup, or investing.

The most attractive savings accounts for Czech citizens are those that pay the highest interest rates. However, savers must read the fine print and understand the conditions attached to these accounts to ensure they maximize their returns. For example, it may be more beneficial for a customer to choose a savings account that requires a higher deposit to earn the advertised interest rate rather than one that only pays interest on a small portion of the deposit.

In general, savers need to keep a close eye on their savings accounts’ interest rates and conditions, as changes can occur without warning. With high inflation and a stable base rate, the conditions of savings accounts are constantly changing. So, savers should regularly review their options and make adjustments as necessary to ensure they are earning the most from their deposits.

Article by Prague Forum