Smaller banks in Bulgaria give 2 to 3% interest on deposits

The significant growth of wages in Bulgaria in the last two years and people's preferences to invest their free funds mainly in deposits contributed to the accumulation of a record 42.5 billion euros in personal bank accounts. Since mid-2022, household savings in the country have grown steadily, and in August the annual rate exceeded 12%.

Such a remarkable rate was not observed even during the first months of the COVID pandemic.

The rapid accumulation of cash deposits in the banks, however, and with a few exceptions, almost never brings any profitability to individual account holders - the main reason for which is the high liquidity of the banks.

Trends in smaller banks

In recent months, interest rates on new deposits have started to rise, but this is happening mostly at smaller banks that need liquidity. It is there that the annual growth of deposits outpaces the average for the Bulgarian banking system.

Interests on deposits are starting to appear little by little, which will inevitably lead to a slight increase in interest on loans, but not something significant," the credit expert Tihomir Toshev told Economic.bg.

tbi bank, which specializes in consumer lending, is among the banks with the highest interest rates on deposits at the moment. It raised the rate from 3.2 to 3.5% when opening a 36-month term deposit online. The 24-month deposit has 2.7% interest, the 12-month one - 1.9%, the 6-month one has 1.4%, and the 3-month one - 1.2%. To access these options customers must first open a neon account, which can be used to transfer funds into the limited term deposits.

It is also tbi bank that reports the most significant growth in deposits, which have grown by nearly 40% for the year as of August. The aggressive approach of the bank ensured its organic growth, and it now ranks in the top 10 of the largest asset banks in Bulgaria.

Bulgarian-American Credit Bank also offers good profitability. The highest interest rate is 4.5% for a 7-year term deposit, 4% for a 5-year term deposit and 3.5% for a 3-year term deposit. The conditions include having a current account at the bank, which cannot be closed during the deposit period, and monthly automatic remittances from it.

That bank also offers opening an online deposit account with 1.8% interest for the 24-month term, 1.55% for the 12-month term, 1.3% for the 6-month term and 1% for the 3-month term. Here, there is no possibility of overdraft, and the minimum opening amount is BGN 1,000. BACB also offers a flexible deposit with the possibility of limited withdrawals from it, with the 6-month interest reaching 0.88%, and an annual interest of 1.18%. The bank also provides the possibility of a standard deposit in a physical branch with an interest rate of 1.2% for 12 months, and 1.3% for 24 months.

D Bank also offers higher interest rates than the average - for an online open deposit, the interest rate reaches 2% for a 2-year period, 1.8% for a 1-year period and 1.3% for 6 months. The bank also offers a deposit with the possibility of topping up, which has an option for a 3-year period, and then the interest on it becomes 2.3%.

Investbank is another institution with higher interest rates – 1.85% for a standard annual deposit and 2.25% for a long-term 3-year deposit with the option of monthly interest payments in advance. If the account is opened online, the interest on the 3-year deposit reaches 2.5%.

Procredit Bank also offers high interest rates - 1.5% for a 6-month, 1.75% for a 12-month, 2% for a 2-year and 2.25% for a 3-year deposit if you have a current account, debit card and internet banking at the bank.

First Investment Bank offers 2% for a 3-year deposit, 1.5% for a 2-year deposit and 1% for a 1-year period. 

Interest rates on deposits have also been raised at Big Bank, the bank with the most modest assets in Bulgaria, where they start at 0.9% and reach up to 3% depending on the term of the contract.

The remaining small credit lenders, such as Municipal Bank, International Asset Bank, Allianz Bank and Texim Bank, offer interest rates between 1.25 and 1.5%.

The larger banks

Due to their huge deposit accumulation, the major commercial banks continue to maintain interest rates on deposits at levels around 0%. As an option, they offer deposits with increasing interest by month or quarter, depending on the term, with the first quarters having a lower interest rate, and the later ones a higher interest rate.

Large banks also focus on offering deposits with partial investment of their funds in mutual funds. It is usually a 70/30 or 50/50 ratio between a deposit and investment portion, in which case, however, the funds invested in the fund are not protected under the Deposit Guarantee Act.

Revolut

British fintech Revolut also offers the so-called "flexible accounts" in euros, pounds or US dollars. Interest rates vary depending on the chosen plan on the platform – more expensive plans provide higher interest rates. They change daily, starting at 3.09% on a Euro account as part of the Free plan and going up to 5.31% on a US Dollar account, part of the most expensive Ultra plan. Different plans also bring additional services like lower fees on platform investments, different insurances, higher ATM withdrawal limits and others. 

This looks like a kind of deposit, but in essence, the service is an investment, and accordingly, the invested amount is not guaranteed by a deposit protection scheme, as is the case with bank deposits of up to BGN 196,000.

The Revolut accounts provide the possibility at any time for additional deposit and withdrawal of funds, as well as for receiving interest on a daily basis.

Translated by Tzvetozar Vincent Iolov