Major drop in deposit interest rates: The return on 1 million TL has melted away
In the last three months, deposit interest rates in Turkey have declined sharply. Interest rate cuts and increases in withholding tax have significantly reduced the returns obtained by investors. Here is the new monthly return on a 1 million TL deposit...
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In recent months, there has been a notable decline in deposit interest rates in Turkey. While the 32-day return on a 1 million TL deposit was at the 43 thousand 400 TL level in December 2024, changes in interest rates have pushed this figure down significantly.
WHY DID DEPOSIT INTEREST RATES FALL?
The primary reasons for the decline in interest rates include the interest rate cut policy of the Central Bank of the Republic of Turkey (TCMB) and the increase in the withholding tax rate. The TCMB has implemented a total of 750 basis points in interest rate cuts over the last three months, which has caused banks to lower their deposit interest rates. During the same period, the withholding tax rate was increased to 15%. As a result of these developments, the 32-day deposit return on 1 million TL has fallen to 35 thousand 770 TL.
Following the TCMB's interest rate cuts, banks quickly updated their deposit interest rates. Interest rates that previously hovered around 48% are now only offered through specific campaigns.
As of March 10, 2025, the highest deposit interest rates are as follows:
Alternatif Bank: 48.00%
Anadolubank: 48.00%
Odea Bank: 47.00%
ING Bank: 47.00%
Fibabanka: 47.00%
However, these interest rates are not valid for every customer, and banks keep interest rates at lower levels for existing customers.
CURRENT RETURN ON 1 MILLION TL
As of March 2025, the 32-day net return on a 1 million TL deposit is calculated at 35 thousand 770 TL. This figure was at the 43 thousand 400 TL level three months ago. In other words, the interest income earned by investors over the same period has dropped by 7 thousand 630 TL.
WHY HAVE DEPOSIT RETURNS DECREASED?
Deposit interest rates, which were high in December 2024, declined rapidly following the TCMB's 750 basis point interest rate cut and the increase in withholding tax.
These changes over the last three months can be summarized as follows:
Interest rates fell: With the change in the policy rate, banks also lowered their interest rates.
Withholding tax rate increased: The withholding tax rate deducted from interest income rose to the 15% level.
Deposit returns declined: The return on 1 million TL decreased by 7 thousand 630 TL within three months.
According to economists, there is a possibility that the TCMB will continue its interest rate cut policy. The Monetary Policy Committee (PPK) announced that they will shape their interest rate decisions based on inflation data. It is stated that if inflation falls, interest rate cuts may continue.
On the other hand, the share of Turkish Lira deposits in the banking sector continues to increase. As of February 28, the total deposits of the banking sector fell to 20.7 trillion TL. However, the share of TL deposits in the total rose to 57.54%.
