Central Bank announces interest rates: Banks' deposit race heats up! Here are the current rates...

The Central Bank of the Republic of Turkey has announced the update made to deposit interest rates. Despite the continuation of interest rate cuts in the recent period, deposit interest rates still provide returns above inflation. The annual inflation rate was announced as 33.29 percent in September, and banks have continued to increase their interest rates on top of this.

INTEREST RATE RISE IN TL DEPOSITS

There is currently a fierce interest rate competition among banks for Turkish Lira deposits. Within the framework of the macroprudential measures taken, banks have increased their TL deposit interest rates to the 45-46 percent level. This rise has been welcomed by investors, and TL deposits have become attractive once again.

The Central Bank of the Republic of Turkey has announced the maximum interest rates for banks. Accordingly, the compound interest rate for short-term deposits has been determined as follows:

47.99 percent for 1-month term deposits,

49.95 percent for 3-month term deposits,

45.88 percent for 6-month term deposits,

42.74 percent for deposits with a term of up to 1 year,

33.6 percent for deposits with a term of 1 year or longer,

The total deposit interest rate was 48.64 percent.

Although there has been a decline in interest rates, especially for 1 and 3-month terms, returns above inflation continue to be provided on an annual basis with compound interest.

A withholding tax of 17.5 percent is applied to demand accounts, notice accounts, and accounts with terms up to 6 months; 15 percent for accounts with terms up to 1 year; and 10 percent for accounts with terms longer than 1 year. This withholding tax is deducted from the interest income earned.

INTEREST RETURN ON A 100 THOUSAND LIRA DEPOSIT

A customer with an investment of 100 thousand lira can earn a gross interest income of 4 thousand lira by taking advantage of the 47.99 percent interest rate for a 32-day term. However, when 17.5 percent is deducted as withholding tax, the net interest return will remain at 3 thousand 300 lira.

A customer with an investment of 1 million lira will earn a gross interest of 40 thousand lira using the 47.99 percent interest rate for a 32-day term deposit. However, after the withholding tax is deducted, the net interest return will be calculated as 33 thousand lira.