Tax elimination makes term deposits attractive again

The majority of clients who have saved money this year shifted their interest towards traditional term deposits, after savings accounts had been the stars in previous years, as no tax is charged on the interest rate any more, and interest rates have been attractive. The fastest rise has been recorded by term deposits, boosted by fiscal measures and by the policy of the central bank. At the end of June, sums attracted by banks into term deposits exceeded 64.5 billion RON (15.3 billion euros), up 55% against the similar time last year. In 2009 alone term deposits rose by 40%. On the other hand, amounts collected in current accounts continued their downward trend, to an annual decline of 19%. Savings accounts work similarly to current accounts, allowing withdrawals and deposits to be made at any time, but the interests offered by banks are higher, close to those charged for traditional deposits. “There are several factors that contribute to this state of affairs, with fiscal changes being the prime factor. Up until last year, current accounts were stimulated by the fact that there was no tax charged on interest rates. As of January this year, taxes have been eliminated for term deposits, bringing them on a level with current accounts,” explains Ionut Dumitru, chief economist of Raiffeisen Bank.