New era in deposit interest rates

A new era for deposit interest rates has begun at banks. While deposit interest rates for 1-3 month terms may appear to be around 67-68 percent, the reality is actually different. 

During the Inflation Report presentation, the response to a question regarding whether deposit interest rates are causing investors to lose money in real terms against inflation was that the interest rate for 1-3 month deposits was 67-68 percent. 

Of course, this figure includes the impact of one-time, very high rates provided for conversions from foreign currency-protected deposits to Turkish Lira.

THE FIRST QUESTION YOU WILL BE ASKED...

According to a report by Bloomberg, if you go to a bank branch and want to open a time deposit account in Turkish Lira with the aforementioned interest rate, the first question you will be asked is: “How much of a deposit are you considering?” Yes, the interest you receive from the bank truly depends on how much money you have. If you are going to open a low-balance account, the interest you receive will be much lower than the figure implied by the Central Bank data.

Applying different interest rates to high-balance and low-balance deposits is, of course, not new. It is a standard process in the banking sector. What has changed recently is the widening of the gap between them.

This issue is also on the agenda of the CBRT. Economists at the CBRT, who examined this in a separate box in the Inflation Report, also determined that the interest rate gap applied to low-balance and high-balance deposits has widened since 2022. 

According to the research, while the difference between interest rates for low-amount and high-amount deposits was 3.7 percentage points between 2014 and 2022, this difference rose to 10.7 percentage points in the subsequent period.