Finnish Households Tighten their Belt: A Look at the Impact of Rising Interest Rates on Deposit Accounts and Investments


How regular bank customers can take advantage of increasing interest rates

The rising interest rates have led Finnish households to transfer their funds to deposit accounts with higher interest rates. During 2023, households transferred 7.3 billion euros to time accounts and slightly more than 2 billion euros to investment deposit accounts. However, despite the increase in transfers, the overall household deposit stock, EUR 108.7 billion, shrank by more than EUR 3 billion during the same year.

The main reason for the decrease was the decrease in funds in overnight deposit accounts, which decreased by EUR 12.4 billion during the same period. Despite this decrease, the majority of household deposits are still in overnight deposit accounts, including current accounts. At the end of 2023, 70.6 billion euros of household deposits were overnight deposits, 10.9 billion euros were time deposits and 27.2 billion euros were investment deposits.

Households had a total of 40.3 billion euros in listed Finnish shares and 34.1 billion euros in domestic funds at the end of the year. As interest rates have risen, the interest rate differences between different deposit accounts have grown, highlighting the importance of carefully considering where to park savings for optimal returns.

The figures presented in the Bank of Finland’s announcement shed light on this trend.

In summary, while Finnish households have increased their transfers to higher-interest rate deposit accounts due to rising interest rates, they have also experienced a decrease in overall household deposit stock as funds shifted from overnight deposit accounts to other types of investments such as time and investment deposits

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