Holm Bank survey: 75% of term deposit holders intend to continue depositing

According to a recent survey commissioned by Holm Bank, 75% of Estonian depositors intend to continue using term deposits. This indicates that even lower interest rates have not diminished people’s willingness to save through fixed-term deposits. Alternatives are more commonly considered by individuals with higher incomes and larger savings.

Those most likely to continue with term deposits are individuals with smaller deposit amounts and shorter investment horizons. Among those whose current deposit term is between one and three years, 79% plan to continue. Of those with a personal net income of up to €3,000, 79% are committed to continuing, compared to 62% among respondents with higher incomes. People with term deposits or portfolios exceeding €100,000 are more inclined to consider alternative options (56%).

“According to data from Eesti Pank, as of the end of April, the volume of term and savings deposits held by Estonian households stood at €4.5 billion, marking a significant increase over the past five years—three times higher than in 2020. A year ago, the volume was €4.3 billion, suggesting that despite falling interest rates over the past year, the role of term deposits in household financial behaviour has not declined,” said Holm Bank CEO Kaspar Kalvet.

The primary reason cited for term deposits was the protection of the value of money (64%). This was particularly notable among respondents of non-Estonian ethnicity (74%) compared to Estonians (59%). The same rationale was also more prevalent among respondents over the age of 50, those with deposit terms of up to one year (74%), and those with deposits under €50,000 (71%). The longer the deposit term, the more frequently depositors cited saving for a specific goal or as part of a broader investment strategy.

“The willingness of term deposit holders to continue depositing is remarkably high, which shows that despite high inflation, term deposits are still perceived as a stable and reliable method of saving. Even amid falling interest rates, it remains important to compare term deposit rates across banks—many larger credit institutions now offer rates below 2%, while smaller banks may still offer up to 3%, resulting in potential returns over 50% higher during the deposit period,” Kalvet added.

“People have different risk appetites—some value the security of knowing their money is safe, while others seek higher returns in the stock market and are willing to take on more risk. Term deposits are undoubtedly the most suitable financial product for those with lower risk tolerance—deposits of up to €100,000 in Estonian banks are securely guaranteed by the national Guarantee Fund,” explained the Holm Bank CEO.

The nationwide survey was conducted by research firm Norstat, interviewing 300 individuals who currently hold a term deposit.

Holm Bank AS (www.holmbank.ee) is a privately-owned bank based in Estonia, operating in the Estonian and Latvian markets and owning the brands Holm and Liisi. Holm's product portfolio includes financing for private and business clients, physical and virtual credit cards, hire purchase, leasing, and term deposits.