One of the biggest problems involved in contracting a bank deposit is the fact that monetary contributions can be recovered once formalized. It is what is called early cancellation and that can be exercised through partial or total bailouts. This scenario can develop due to the lack of liquidity on the part of its holders in certain scenarios that may arise. Among those that stand out the existence of debt to third parties, tax obligations or any other accounting need in households. To the extent that it is necessary to resort to the money from term deposits.
Term deposits have retention periods that must be scrupulously observed. They can be 6, 12, 24 or even more months. But what happens if in the period of permanence the clients need to use these funds? Well, in the first place, there will be no choice but to analyze whether in the contract this money outflow is allowed. Because not in all cases the same scenario is always fulfilled. To the point that it can create more than one uncertainty about what you have to do as a depositor that you are.
Within this general scenario, the most common is that you cannot carry out any redemption, either partially or totally, and until its expiration. A fact that can generate more than one problem for bank users and that may have happened to you at some point in your life. Anyway, in this article we are going to explain all the scenarios that may occur so that you can correctly solve this scenario. Regardless of whether or not you have to earn a commission or penalty for this incident. Because it will be very important for your personal interests from now on.
Commissions on deposits
Normally, term deposits carry a commission for early cancellation and that its amount is usually range between 1% and 3% on the interests of this important banking product. Well, a good part of these financial products include a penalty of these characteristics if some kind of rescue on monetary contributions. Either partially or in full on the amount invested. However, it should be pointed out that it is a rate on the interest accrued by the tax and not on the invested capital. It is a substantial difference that you must assume if you are going to go through this situation.
On the other hand, it is also very important to know that these kinds of penalties have to be included in the contract for this product. Because if it were not like that, the banks could not charge you any type of commission since you could claim it instantly with its subsequent return as it is considered to be a clearly abusive clause. Generally, term deposits do include a commission of these characteristics so that you have the money deposited until the precise moment of its expiration. Where you will receive your financial contributions plus their corresponding interests.
Strategies for not paying commissions
In any case, and to try to get around these small expenses that bank deposits have, you have some other mechanism that can help you contain this expense. One of them consists of subscribing deposits shorter in terms of length of stay. That is, to 1, 2 or even 3 months so that you can be in better conditions in the liquidity of your checking account. Not surprisingly, in these periods it is more complex for you to have an urgency that results in you having to bail out your capital. Addressing shorter deadlines is always a very effective solution to avoid falling into this incident that can create more than one problem for you from now on.
Another of the mechanisms that you have at hand to avoid this scenario basically involves not investing all your savings. If not, on the contrary, it will be enough that Destine only a part of them. In this way, you will certainly not have to make use of your deposit when you do not have a positive balance in your savings account. In this sense, you should think that unexpected expenses always appear every year. As for example, the children's school, the payment of the dentist or even an unexpected debt before third parties. To the point that it can create a very serious problem in your personal accounts.
Deposits in kind: no redemption
Time deposits are marketed under different models and some of them do not allow early cancellation. This is what happens with deposits in kind in that it is not allowed under any circumstances that you can withdraw money early. You should remember that this class of impositions is characterized fundamentally because it does not offer its holders cash, as on the other hand is normal. If not, on the contrary, their retribution is materialized through suggestive gifts.
Well, if you have contracted one of these banking products, you will have no choice but to wait for its expiration to have all your savings. They do not allow you to make any redemption, neither partial nor total, since the gifts they provide at the precise moment you subscribe the product. That is, at the beginning and not at maturity, as happens with a good part of time deposits. In addition, another of its drawbacks is that this class of products have a longer retention period than in the other products. They range between 12 and 36 months in which you can do absolutely nothing if you need money. It is convenient that you do not forget it to avoid some other unpleasant scenario.
Renegotiate interests
Another of the scenarios that can be generated from these moments is that you are in front of a deposit, in which in effect, it does not contemplate commissions or penalties for this concept. But where you will have no choice but to renegotiate your interests if you cancel it early. To the point that new conditions they will not be as advantageous for your particular interests as before. Because in effect, the interest rate they offer you may be reduced by up to half as a result of this need of yours. To the point, that in a certain way, you will be facing a different financial product than the one you had contracted at the beginning.
On the other hand, it is also advisable to analyze whether this kind of imposition is convenient for you to hire or perhaps they are not very favorable for your interests as a small saver that you are. In this sense, there is no doubt that it will mean a decrease with respect to the profitability that the user can obtain. Another class of deposits that will not include commissions will be those with shorter terms, of up to 3 months that may not be subject to any cash withdrawal by their holders. For the rest, the promotional or linked to other financial assets will continue without being able to carry out this monetary operation.
Is it convenient or not to hire them?
In any case, the client must analyze whether it is convenient to subscribe an imposition under these commissions. Since the average profitability of these financial products is currently 0,12%. As a consequence of the decision of the European Central Bank (ECB) to lower the price of money and that has led to the interest at the moment being 0%. In other words, at historical lows, a factor that is really hurting the contracting of any kind of bank term deposits. To the detriment of other investment models, such as investment funds that can generate a greater return on savings, although without guaranteeing it at any time.
Now when you need to make a rescue it will be time to analyze how is the deposit that you have formalized and highlight if it is profitable to execute this action. Because you may find that the interest that will go to your savings account will be minimal. It is like asking if it is really worth depositing money for so long in a banking product of these characteristics. Because at the end of the day it cannot be the best decision to protect your assets. Not surprisingly, there will be very few euros that will go to your checking account balance.
From this perspective, high-paying accounts can be a better solution for your interests. Because apart from improving performance, you will always have complete liquidity on the amount you have available. Without any kind of commissions or expenses in management or maintenance. In this way, you will not have the problems that deposits are causing you at the moment. Because its low profitability is joined by the fact that it is a product that has evolved very little in recent years. To the point that investors are turning to other more flexible savings models with a more generous interest rate. Represented by certain types of accounts and investment funds based on fixed income.