Stashed books, swine substitutes, and bedding: VTB uncovers Russian cash hideaways
In the cash-conscious Russia, a VTB survey unveiled a surprising twist in the nation's savings habits. It appears that every second citizen keeps a bit of green at home, but many would switch their stash to a bank if it offered elevated interest rates, foolproof security, and a promise to safeguard their dough.
Typically, the kitty at home stays small — up to 30,000 rubles. Around a quarter of the respondents favor bank vaults or various homemade safes, piggy banks, or books for their greenbacks. Some innately creative Russians hide their dough in secret pockets, under mattresses, behind pictures, in kitchen utensils, electronics, under the floor, inside toys, or other children's items, even in the bathroom.
Most Russians keep a modest sum — between 5,000 to 30,000 rubles (over 40%) or between 30,000 to 100,000 rubles (over 30%). The convenience of having quick access to their funds is a significant factor for this cash habit.
Simultaneously, a savings account guarantees unrivaled access to funds at a moment's notice — deposits and withdrawals can be easily facilitated without forfeiting previously earned interest. These accounts function as an instant electronic purse, offering quick access to funds and passive income.
Dmitry Volodin, head of the savings and deposits department at VTB, weighed in, "The staggeringly high interest rates on bank products have subtly meddled with the storage preferences of Russian savers, who are increasingly gravitating towards amassing more nest eggs in the bank rather than at home. Deposits and savings accounts not only tender a lucrative passive income but also assure the security of your savings."
VTB's analysis suggests that the proportion of cash rubles in savings and investments, excluding pension and insurance products, has plummeted to record lows over the past six years and may continue to slump further before the end of the year.
Survey was conducted from April 4 to 10 among a representative sample of 1,500 Russians aged 18 to 65 residing in cities with a population exceeding 100,000.
Unveiling the Bank Boom
Luring Interest Rates
Bank products promising high interest rates tempt Russians to save more. The sky-high key interest rate, currently standing at 21%, has sparked banks to offer alluring rates on savings accounts and short-term deposits, making these products a viable alternative to traditional fixed-term deposits.
Safety Shield
The guarantee of safety enticing savings habits. Russians are drawn to savings accounts because they offer a safe and dependable avenue for storing funds. The assurance of a safety net, coupled with flexibility, makes savings accounts an alluring option during turbulent economic times.
Passive Pockets
Banks offering opportunities for passive income via high-interest savings accounts have sparked interest. While flexibility and safety remain the primary focus, the potential for earning passive income without committing funds to long-term deposits appeals to consumers. Some banks cater to new clients by offering premium rates for a limited period, further enhancing the appeal of savings products.
Rolling the Dough
As the economic landscape evolves, with anticipations of inflation easing to 7-8% in 2025[1][3], Russians are expected to stay guarded and prioritize savings and liquid investments until a sense of economic stability is reacquired. With banks offering high-yield savings accounts and asserting their commitment to safety, it seems like Russians are ready to park their savings with the bankers, trading their piggy banks for savings accounts, and watching their money grow.
- Banks offering high-interest savings accounts have become an attractive option for many Russians, as they promise both safety and passive income.
- With the assurance of a safety net and the flexibility to access funds at any time, savings accounts are enticing for many during periods of economic instability.
- The allure of high-yield savings accounts has led some banks to offer premium rates to new clients, making these products even more appealing.
- As inflation rates are expected to decrease to 7-8% by 2025, Russians are expected to continue prioritizing savings and liquid investments, and it appears they are ready to deposit their cash in banks instead of hiding it at home.
