Interest-bearing accounts or traditional fixed-term deposits? We’ll tell you how to use each one.
If you want to invest your money, it’s important to know how to use a paid account or a traditional fixed-term deposit.
In particular, the difference between one option and the other has to do with the length of time you can leave the money invested without needing it.
How is this? You need to know that:
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A traditional fixed-term deposit requires (established by the BCRA) that the deposit you create be frozen for a minimum period of 30 days. Therefore, you won’t be able to access the money you initially invested, nor any profits, during that entire period. These investments have a minimum amount, depending on the bank.
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On the other hand, a paid account offered by some virtual wallets allows you to withdraw your money whenever you want, as it will pay you daily returns while you have them invested there. Furthermore, there are no minimum investment amounts. For example, the minimum balance required to start trading is just $1.
Remunerated account: advantages over a fixed term
Interest-bearing accounts work because the money is placed in a Common Investment Fund (FCI), which allocates the capital it holds to highly liquid, readily available, and low-risk instruments, such as demand deposits, sureties, and fixed-term deposits in major Argentine banks.
The advantage is that it allows you to both withdraw and use your money and the interest earned each day, at any time, without conditions or waiting, for example, to address an unplanned household emergency, such as having to pay someone for electricity or plumbing.
We give you an example:
If you receive your paycheck before the 5th of each month and need to pay rent or another expense before the 10th, you can leave your money invested in your interest-bearing account for that short period of five days or less. This way, you have the option of earning a profit during the very short time you don’t use your earnings (something that isn’t possible with a fixed-term deposit).
In short: profit as a condition
When you have extra money and you know for sure you won’t be using it for at least 30 days, it’s better to turn to a traditional fixed-term deposit.
In that case, the benefit you’ll get is a 97% Annual Nominal Rate (ANR), equivalent to a monthly percentage of 7.97%. This figure is a few percentage points higher than the estimated return offered by virtual wallets, which is around 81% per year, or 6.66% in 30 days.
When you need to have money available at all times to pay for urgent and everyday commitments or avoid paying late fees, it’s best to use a paid account, which allows you to get your money instantly when you need it.
