What is a rentier deposit and should I open it?

Deposits are a safe way to invest your savings, which is why they are chosen by many people who value “quiet” investments. Products such as a term deposit or a structured deposit are known to customers and often used. The investor deposits funds for such a deposit, and then after a certain period of time he is paid a profit in the form of interest. The disadvantage of this form of investment is that in order to receive interest, it is necessary to wait for the termination of the deposit. However, there is a solution on the market that allows you to make a profit faster. This is a different type of deposit known as a rentier deposit. What is this deposit, how does it work and who can use it?

What is a rentier deposit - definition

Rentier deposit is a banking product and a type of deposit, the interest on which is not capitalized. This favorably distinguishes the deposit of rentier from others. Therefore, after the calculation, interest is paid to the client’s bank account - they are not added to the capital accumulated on the investor’s deposit. Interest is paid to our account during the term of the deposit, i.e., for example, depending on the terms of the agreement, the depositor receives it monthly or quarterly.

We can say that a rentier deposit works like a kind of long-term bank deposit - where interest is paid to the specified account, it is not capitalized.

For how long can such a deposit be opened? Usually it can be set for a minimum of 12 months - however, there are offers of such products on the market for a longer period - for example, for 18 or 36 months.

How to open a rentier deposit and who is this banking product for?

Not everyone can afford to open a rentier deposit. This feature is reserved for specific individuals. First of all, in order to be able to open such a deposit, you must first sign an agreement with the bank on the placement of funds between the depositor and the bank. Through such a deposit, banks receive capital that allows them to offer products to other customers, for example, to issue a loan. In turn, the depositor receives an appropriate remuneration in the form of interest for the safe placement of his funds in the deposit. Broadly speaking, this is a bit like a customer giving a loan to a bank.

As mentioned above, the rentier deposit is available to every client. In order to use it, in addition to concluding an agreement with a bank, you must meet certain requirements. It’s worth starting with the fact that you must have significant savings - in the amount of several hundred thousand zlotys. As a standard, banks set the so-called. the entry threshold is at least PLN 100,000 - therefore this offer is addressed to a much smaller group of customers than traditional deposits, where the maximum amount that can be deposited is usually PLN 200,000. zloty.

Rentier deposit is certainly a good solution for those clients who have free large capital, but do not want to invest it on the stock exchange, but prefer safe solutions, without the risk of losing their savings. Due to the high entry amount, placing funds on a deposit of a rentier can be quite profitable. The condition is to freeze this money on deposit for a longer period.

It is important to remember that the Bank Guarantee Fund, in the event of, for example, a bank failure, protects our deposit only up to the amount of 100,000 euros. Therefore, customers with really big savings should think about opening several rentier deposits or take advantage of such a deposit offer abroad.

What are the characteristics of a rentier deposit?

Rentier deposits are definitely not a standard product that we can get from a bank. This is an option for people who have really big savings and who value the safety of investments, and therefore do not want to take risks by playing on the stock exchange. This type of deposit can be a very good way for them to earn extra income. So what are the features that distinguish rentier deposits from other similar products?

First of all, it is a long-term investment horizon. As mentioned above, in order to be able to take advantage of such an offer, you must take into account that your funds will be frozen for at least 12 months - after all, this is the shortest period for which a rentier deposit is opened. In some banks, it can be up to 36 months.

In addition, what distinguishes this product is the frequent capitalization of interest. This is even done once a month. In addition, they are regularly paid by the bank to the depositor’s account. Therefore, in this case, there is no phenomenon of withholding interest on the deposit until the expiration of its validity.

Rentier deposit - interest rate

Looking at the interest rate on a rentier deposit, as well as on an ordinary term deposit, at first glance it may seem that the former are less profitable. However, such a comparison would be inappropriate, as other factors must be taken into account. First, rentier deposits are for much larger sums—and the more we are willing to pay, the better terms we can try to negotiate. In addition, the bank will capitalize interest every month and pay it to the specified bank account. In addition, in the case of a rentier deposit, the bank cannot invest in it all the contributed capital, since it is obliged to regularly pay interest to the client.

The interest rate on a rentier deposit is usually fixed, so it is easier to calculate the possible profit on such a product. To do this, we multiply the interest rate on the deposit by the number of months for which we “freeze” our savings on this deposit.

How to choose the best investment deposit?

Rentier deposit is a good way to provide yourself with passive income that does not require the investor to be overly involved in investments. But how to choose the best offer of such a deposit? It is known that the best one will be the one with the highest interest rate, but first of all we should start by adjusting this product to our needs and possibilities. Therefore, before choosing a product, check the following:

• term of the deposit agreement - this is a fundamental point that requires attention. Before opening a rentier account, consider whether you can freeze your savings for such a long period, or do not plan any investments in the near future. In a situation where we are not entirely sure whether we will need these funds, it is worth either choosing a 12-month annuity, or choosing a traditional deposit, for example, 6 months.
• Minimum entry amount - think about how much money you can put on a deposit of a rentier. Also check the minimum amount required by the given bank and adjust it according to your requirements.
• Interest - in this case, it is known that the higher the better.
• Interest payment frequency - check how much the bank plans to pay interest, remember that it will be reduced by the Belka tax.
• What are the consequences of hacking a deposit - check what awaits you, but whether you will have to cancel the deposit ahead of schedule.
• Additional products to the deposit - make sure that the bank does not require you to set up additional products in order to use the Rentier Deposit - this is important, as such products may include additional fees.

To sum up, before opening a deposit of a rentier, it is worth checking the different ratings of such deposits - this will make it easier to compare individual elements. First of all, you should pay attention to the minimum amount, the duration of the deposit or the frequency of withdrawal.

Choose products from trusted companies. Beware of rentier deposits offered by various parabanks. They are not guaranteed by the Bank Guarantee Fund, therefore, in the event of bankruptcy of such a legal entity, your funds are not protected in any way.

Is it profitable to open a rentier and what are its advantages?

The main advantage of a rentier deposit is its security and stability of this form of investment. The client regularly, in accordance with the provisions of the agreement, receives interest on the deposit. So he gets a steady income. Due to the fact that he receives profit in certain, fixed periods, he can use it for current needs or invest again - for example, by putting the earned funds on another deposit.

Another advantage of this type of product is the fixed interest rate, which does not change during the term of the deposit. In order to ensure the profit of the investor, his interest rate must be high enough.

Rentier deposit is a good product for people who have a large amount of funds that are not currently needed for other investments. Therefore, by placing them in this product, they can receive an additional salary paid regularly, i.e. passive income.