Time deposits at 3.59%, with which you can protect yourself from rate cuts

The countdown to the European Central Bank cutting rates has already begun. If the script is completed, I will cut them next Thursday. While the path forward is unclear, one of the negative consequences of the decline in the official price of money is that the profitability of bank deposits will also tend to adjust to this new price reality. One way to lock in high returns for a longer period is to resort to deposits with longer maturities. The most profitable ones offer yields of up to 3.59%.

The best offers belong to European banks. Specifically, There are three with a maturity of 24 months, which achieve a yield of 3.59%. It’s about SME Bank, based in Lithuania; Belonging Haitong Bank, the Spanish branch of one of China’s largest securities investment banks; and from Italian Proghetto Bank. All three require a minimum investment of €10,000 and a maximum reward of €100,000 (see chart). Now the way to sign up with any of them is through the Raisin savings platform, which gives access to deposit and account offers from some European banks that are more profitable than those of Spanish banks.

One aspect to take into account is the taxation of each of these three deposits. For example, in the case of SME Bank in Lithuania, the standard withholding tax rate is 15%, but it is possible to reduce this rate to 10%. However, the second bank, Haitong Bank, which is a Spanish branch, applies the standard Spanish withholding tax of 19%. In the case of Banco Progetto in Italy, non-residents of the country do not withhold tax and will not need to provide any document.

If you prefer to enter into a deposit agreement directly with the organization, the most profitable is in the hands of the Reno bank, which also offers 3.44% for 24 months. Unlike the previous ones, the deposit amount to receive this reward is lower – 500 euros. It is also linked to the Deposit Guarantee Fund, which is different from the Spanish and French ones, although in practice it works the same. The FGD guarantees the first 100,000 euros for each depositor in the event of bankruptcy of the company.

The Spanish FGD includes deposits of EBN Banco. He has three bonds with maturities of 18, 24 and 36 months, all offering 3.10% interest starting from €5,000.

Although the ECB is beginning to ease its monetary policy and this may affect deposit returns, it must be borne in mind that it is not yet clear what it will do next at the July meeting. “The ECB makes a clear distinction: The next solutions involve slowing down the pace, not necessarily starting a retrenchment cycle per se.“- notes Ruben Segura-Cayuela, chief economist for Europe at Bank of America. In their opinion, “we see little chance of another contraction in July.”

“We think service inflation and wage growth are still too high for a sequential cut in June and July, so it could be a tough cut,” agrees Felix Feser, economist at abrdn.

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