When interest rates are cut, are deposits always a losing deal?
I’ve been mulling this over lately as I watch interest rates on parking accounts fall—I’m wondering whether I should just keep my money in a deposit.
9 answers
Got a source? The word “unconditionally” alone is a bit...
Well, that’s a bit... A parking account and a deposit aren’t really comparable, so I don’t know why people keep discussing them as if they’re on the same level. A parking account gives up interest in exchange for liquidity, and a deposit is the opposite, isn’t it?
Agreed—if you stick only to deposits, you really do lose to inflation.
It's not necessarily a loss. If you open a deposit around when rates are being cut, rates will fall further afterward, so locking in for the long term now is often actually advantageous. I locked into a 3-year deposit at just over 4% last year, and looking back now, it was a good choice.
I've been worrying about this too lately ㅠㅠ Parking rates have dropped so sharply that I'm not sure where to keep my cash-like assets. For now, I've left only three months' worth of living expenses in a parking account and split the rest into fixed deposits.