Your life savings under your pillow? A survey shows that Czechs have long ago started switching to savings accounts
Prague, 22 November: Czechs stopped keeping their life savings at home a long time ago, according to a survey conducted this autumn by the Response:NOW market research agency with a representative sample of 1,139 respondents for the Financial Market Guarantee System. The data show that, on the contrary, they are moving to savings accounts, on which banks have now begun offering more interesting interest rates.
56% of Czechs admitted to keeping at least some cash at home. However, 36% keep sums of less than CZK 5,000 at home to cover sudden expenses. Another 17% said they keep up to CZK 50,000 in cash at home.
Only a fraction of the population keeps higher amounts at home – specifically only 2% keep up to CZK 100,000 and 0.7% higher amounts. “This tells us that people want their money to be safe. And this is why they do not keep unnecessarily large sums at home. If they deposit their savings in a bank, building savings bank or cooperative credit union, they are covered by statutory deposit insurance. This guarantee undoubtedly contributes to people trusting financial institutions more and more,” explains Renáta Kadlecová, managing director of the Financial Market Guarantee System. The data are clear – while 84% of Czechs trusted banks in 2017, this year the figure is already 89%. Similar growth has been recorded by building savings banks and cooperative credit unions.
Cash? Put it on a savings account!
The popularity of savings accounts has grown considerably compared to five years ago. While they were used by 41% of respondents in 2017, this figure has risen to 65% today. “A savings account is a popular financial product that allows funds to be kept in a flexible way. In most cases, withdrawals are not subject to any conditions, unlike with term deposits. Interest rates on savings accounts have increased in recent months. And, most importantly, deposits on savings accounts are covered by statutory deposit insurance. So in the event of a financial institution going bankrupt, people will get their savings back, up to the equivalent of EUR 100,000,” Renata Kadlecová explains.
The number of people using current accounts has also increased by 7%, while the use of building savings accounts has increased by 11%. The number of people using term deposits has also increased – from 6% to 14%. All these products are also covered by statutory deposit insurance.
How to choose a bank? People have a clear answer
Czechs consider the reputation and trustworthiness of the institution (81%), the fees (80%) and the offered interest rate or investment income (79%) to be the most important attributes when choosing a financial institution. Other important attributes are the risk associated with the investment (77%) and whether the product onto which the person is entrusting their money is insured (76%).
On the other hand, whether the institution is based in the Czech Republic is less important (53%), as is whether they are already a client of that financial institution (42%) and whether someone known or a relative (37%) recommended the financial institution to them.“We recommend that people check whether the financial product onto which they are depositing their money has deposit insurance. People can obtain information about this directly from the financial institution itself, as it has an obligation to inform clients about the insurance of the products it offers, or on the website of the Guarantee System. It is also important to know the deposit insurance limit, which is the equivalent of EUR 100,000. If people have more than EUR 100,000 to deposit, we recommend splitting this amount among several financial institutions to ensure the deposit insurance limit covers the entire amount,” Renáta Kadlecová concludes.
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