Term Deposits: What will be the trend in rates when AFP and CTS withdraw? | Your money

In this scenario, an interesting alternative would be fixed term deposit interest rates?

While there may be some campaigning by financial institutions to raise these funds, rates will continue to trend downwards, as has been the case in recent months, due to the Central Reserve Bank’s cut in the reference rate (BCRP). , analysts estimate.

“There may be a campaign with a temporary special offer, but generally interest rates will continue downward,” personal finance expert Walter Eysaguier estimates.

Economist George Gillen, associate professor at Eason, agrees. “Despite withdrawal of funds from AFP and CTS, central bank policy is the biggest force,” he noted.

read more: Withdrawal of AFP and CTS: Precautions to be taken if you invest in financial markets

It should be noted that between October 2023 and May 2024, the BCRP has made seven monthly cuts in its benchmark rate, from 7.50% to 5.75%. And analyst consensus estimates that the reference rate will record further cuts in the coming months.

The interest rate on term deposits also follows the same trend. For example, at the bank level, the time deposit rate declined from an average of 6.6% at the end of 2023 to 5.7% at the end of February and is currently at 5.5%, according to the Bank Watch report. , Insurance and AFP (SBS), with data as of May 21, 2024.

That’s why George Gillen recommends making a term deposit as early as possible to access the best rate when the funds become available. “People should hurry to save, because every month the rate will go down,” Gillen insisted.

Along these lines, Eyzaguirre says the financial market is internalizing that interest rates will continue to fall in the coming months, which is why some financial institutions are offering lower rates when saving for longer periods in term deposits.

For example, following the SBS report on bank rates, in the case of term deposits between 91 and 180 days, the average annual rate is 4.8%, while for deposits over 360 days, the average rate is as low as 4.5%.

read more: Interest rates: BCRP falls when most loans are transferred

That is why when making a fixed term deposit, Eyzaguirre recommends reviewing the rates offered according to the duration of the savings, since it will pay more interest in the short term.

“You pay more for short-term deposits than for long-term deposits. So, you should ask about the rates they pay for 3 months, 6 months, 1 year, 3 years. So choose the best,” he remarked.

Another suggestion is to review the rates charged at municipal, rural and savings banks, which in most cases are higher than bank rates.

Information. As for CTS account rates, analysts have pointed out that the downward trend will further strengthen after these funds lose their obscurity once again.

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