Banking on savings

Though around 60 percent of Polish households' nest eggs are still located in savings accounts, their popularity is declining steadily - in 1996 over 80 percent of Poles' savings was held in bank accounts, and by 2010 it is estimated that only 40 percent will deposited into short- and long-term deposits, putting the rate at a similar level to most Western countries.

Maciej Kossowski, an expert at financial advisory company Expander, acknowledges that Poles tend to trust banks more than their Western counterparts, but he doesn't think Poland is that far behind the Western European countries with the percentage of savings located in bank deposits.

"In many of these countries bank deposits take close to 40 or even between 40-50 percent of household savings," he claims. It is the Anglo-Saxon countries, with their liberal traditions, that are way ahead of the pack. "In the United States 40 percent of the savings are invested directly in the stock exchange and around 30 percent in investment funds," Kossowski explains. The trend is already visible in Poland. Following the introduction of the tax on profits from interest rates on savings, many Poles started looking for alternative ways of investing their assets. Nevertheless, savings accounts remain the most popular means of storing one's assets in Poland.

Guaranteed return

Although dubbed traditional and old-fashioned, locating assets in savings accounts has its advantages. "A guaranteed rate of return is the main advantage of a bank deposit," Mbank's core products manager Anna Sitek-Krakowiak explained. "The market interest rate of a bank deposit averages around 3-3.5 percent," she added.

Some long-term (over one year) accounts might have an interest rate exceeding six percent, but long-term deposits most often do not have a guaranteed rate of return. "Due to falling interest rates, short-term deposits have higher interest than the long-term ones," Sitek-Krakowiak said.

Those clients depositing larger sums, in tens of thousands of złotys, can expect a higher interest rate. Some banks even offer their wealthiest clients a chance to negotiate their savings account interest rate. Sitek-Krakowiak points out that the most popular deposits are the short-term accounts offering the highest interest rates, such as bimonthly accounts. Among the long-term accounts, one, five and ten year schemes are the most sought after.

Avoiding temptation

Sitek-Krakowiak also sees another advantage of a savings account. "Saving for a firm period of time helps us to save money and manage our budget. We are not tempted to withdraw the money," she says. However, because of growing competition, banks are starting to offer flexible saving  products, in which a client can withdraw his money even before the end of the deposit period. She recommends this form of saving to cautious investors with a temporary surplus of funds. Those clients are usually reluctant to invest in investment funds or risk their income on the stock exchange.