In a move anticipated by both the Financial Operators Survey and the Economic Expectations Survey, the Central Bank of Chile announced the eighth consecutive reduction of the Monetary Policy Rate (MPR), leaving it at 5.75%.
This decision is part of a strategy to promote economic recovery and control inflation, but poses Questions about the convenience of holding investments in time depositstraditionally considered safe and profitable instruments.
It should be remembered that DAPs are a form of savings or investment in which people deposit their money in a bank for a defined period of time, in exchange for receiving the interest generated during that period. In simpler words, It’s like lending money to the bank for a while and getting paid for it.
One of the main attractions of term deposits is their security, because they offer a guarantee that the initial capital will not be lost, since At the end of the agreed period, investors will receive their initial investment along with the interest generated. Besides, They do not have any type of cost or commissionwhich makes them an ideal option for those who have a low risk profile.
Likewise, this type of financial instrument is regulated by the Central Bank and the Financial Market Commission (CMF), providing greater security and peace of mind for those who invest in them.
Term deposit interest rate ranking
In order to be able to compare the rate of term deposits offered by banks and financial institutions, we carry out simulations for a renewable DAP of $1,000,000 for 30 daysaccording to the current interest rate in each entity.
According to the simulations carried out by Chócale, Banco Internacional, Banco Ripley and Consorcio offer the best rates of interest in DAP. On the other hand, Santander and BancoEstado have the lowest yields for time deposits.
| Bank/Cooperative | Amount to deposit | Interest rate | Amount to win | Final amount to receive |
|---|---|---|---|---|
| International Bank* | $1,000,000 | 0.56% | $5,613 | $1,005,613 |
| Ripley Bank* | $1,000,000 | 0.56% | $5,613 | $1,005,613 |
| Consorcio Bank* | $1,000,000 | 0.51% | $5,129 | $1,005,129 |
| BTG Pactual* | $1,000,000 | 0.50% | $5,032 | $1,005,032 |
| BICE Bank* | $1,000,000 | 0.49% | $4,935 | $1,004,935 |
| Ahorrocoop | $1,000,000 | 0.49% | $4,900 | $1,004,900 |
| Banco Security* | $1,000,000 | 0.48% | $4,839 | $1,004,839 |
| Scotiabank* | $1,000,000 | 0.46% | $4,597 | $1,004,597 |
| Itaú* | $1,000,000 | 0.43% | $4,258 | $1,004,258 |
| Falabella Bank* | $1,000,000 | 0.42% | $4,161 | $1,004,161 |
| Bci Bank* | $1,000,000 | 0.42% | $4,161 | $1,004,161 |
| Chile bank* | $1,000,000 | 0.42% | $4,161 | $1,004,161 |
| Oriencoop* | $1,000,000 | 0.39% | $3,871 | $1,003,871 |
| State Bank* | $1,000,000 | 0.36% | $3,581 | $1,003,581 |
| Santander (Select) * | $1,000,000 | 0.35% | $3,484 | $1,003,484 |
Mutual funds are positioned as a better alternative
After the Central Bank confirmed the downward trend of the Monetary Policy Rate with the eighth consecutive reduction, the yields of Time deposits were again affected.
According to Jesús Juyumaya, an academic at the Faculty of Economics and Business at the Universidad Santo Tomás (UST), this is because the MPR is the interest rate at which the Central Bank lends money to financial institutions.
“When the MPR is adjusted, this affects the interest rates that banks offer their clients, which can cause term deposits are less attractive for investors looking for higher returns,” he added.
In this sense, the academic pointed out that for those who are looking for an instrument that delivers greater profitability, mutual funds are presented as a good investment tool, since the Decreasing the monetary policy rate can “boost bond and stock prices, benefiting mutual funds that invest in these assets.”
Not enough, the choice between these two instruments will depend on the investor’s risk profile, investment horizon and market conditions, which is why Juyumaya recommended “seek personalized financial advice to make informed decisions and have a diversified investment portfolio.”
