It is easy to distribute money if you have enough of it, but most of us are still constantly struggling with a chronic shortage of banknotes in any currency. Somehow we are ‘scraping by’ from month to month, and we should save something for a rainy day.
Socks as a place for savings have long lost the battle against banks and savings institutions. Once we decide to save, we must also decide in which currency. Savings in euros remain the most popular among Croats, but kuna savings are also becoming increasingly popular.
What are the advantages of foreign currency savings, and what are those of kuna savings, and how to decide, we decided to check with several bankers. Damir Krcivoj, director of Deposit Business Products and Investments at Zagrebačka banka, explains that some of their clients direct their money into other forms of investment, but it is always recommended to keep part of the financial assets in safe forms such as term deposits. Most, he says, recognize the importance of investing with a balanced ratio between security and risk.
How to protect yourself
The method, type, and form of savings depend on the preferences, habits, and possibilities of the client – currency is just one of the elements of savings that the client chooses according to their wishes, notes Krcivoj. Interest rates on kuna savings are traditionally higher than those on euro savings. Zagrebačka banka, Krcivoj notes, also offers other foreign currencies that the client can choose if they wish to term deposit their money in them (e.g., if the client receives their salary in dollars). Interest rates vary depending on the chosen currency. Clients of Zagrebačka banka, Krcivoj reveals, traditionally prefer foreign currency savings and euros, which is why most term deposits are still in foreign currency, as much as 90 percent.
Moreover, this share of foreign and kuna savings at Zagrebačka banka is in line with the ratio between foreign and kuna savings in total savings in the banking sector of Croatia, which has not changed since 2009. Given that the best investment is one that is distributed in multiple forms, it is wise to distribute savings in multiple forms and several currencies. Saving in multiple currencies is a good way for the client to protect themselves from currency depreciation, explains our interlocutor from Zagrebačka banka.
Help in planningPrivredna banka Zagreb offers a rich selection of savings products. The savings that clients most often arrange at this bank are PBZ – prospective foreign currency savings in euros and PBZ – prospective savings in kunas. The main feature of these products is the possibility of subsequent payments, in amounts and periods according to the client’s wishes, along with the possibility of arranging a standing order, which facilitates planned savings for clients, explains Dražen Dumančić from the Corporate Communications Office of PBZ.
If subsequent payments move to a higher tier, at that moment, interest is calculated at a higher interest rate. Interest rates are variable, depending on the term and amount of the deposit. After the term expires, an additional bonus of 10 percent is paid on the calculated interest, reveals Dumančić. If the savings are arranged through the PBZ365 online channel, clients receive an incentive portion on the interest rate. PBZ perspective can be arranged for terms ranging from six to even sixty months. One of the benefits is the possibility of accessing the money before the term expires without a fee, but with interest calculated as for savings deposits on demand. Among other products at PBZ, they highlight the possibility of arranging products in various currencies, with variable and fixed interest rates, the possibility of choosing the frequency of interest payments, and the possibility of negotiating the interest rate directly with the client for higher deposit amounts.
Time conditionEven at Hrvatska poštanska banka, they do not want to openly advise which currency is best for saving, but they highlight the basic advantage of kuna savings as a more favorable interest rate of up to five percent per year in a promotional offer that lasts until October 31. In foreign currency savings, says Slavica Pulić from the bank’s Sales and Marketing Department, primarily in euros, clients believe that these are deposits that will effectively preserve the value of the deposited money due to the low risk of exchange rate changes.
At Imex banka, they emphasize the common advantages of their kuna and foreign currency savings. These include, above all, competitive interest rates, long deposit terms, the choice between fixed or variable interest rates, the possibility of periodic interest payments (monthly, quarterly, semi-annually, and annually), and the absence of penalties in case of early termination. In kuna savings, they cite higher interest rates, a relatively stable kuna exchange rate against the euro, and the absence of conversion costs since it is a domestic currency. As the greatest advantage of foreign currency savings, especially in euros, they cite the client’s trust in that currency.
We also sought advice from a personal banker in case we want to save a ‘wealth’ of seven thousand kunas in their bank. In which currency, we were curious. At Imex banka, they replied that in that case, it would be best to term deposit that amount in kunas for a period of 12 months. Namely, the interest rate for that period on that amount with them is five percent. This means that after the expiration of that savings period, we could put 7350 kunas in our pocket. This may not seem like much, but if it were larger amounts and a longer savings period, it would be a different story. But it’s good to start saving. Kuna by kuna or euro by euro and – maybe one day – a little house in the flowers.
