Bank Deposit (Lokata) — What It Is? Types and Interest Rates

Definition

A bank deposit (lokata) (term deposit) is a banking product where you entrust a specific amount to the bank for a set time in exchange for guaranteed interest. After the deposit period ends, you receive the capital increased by accrued interest.

Types of deposits

By interest rate

• Fixed — rate known upfront, doesn't change throughout the period
• Variable — interest rate linked to WIBOR or NBP's reference rate

By period

• Short-term — 1 day to 3 months
• Medium-term — 3–12 months
• Long-term — over 12 months

Special types

• Progressive deposit — interest rate increases each month
• Negotiated deposit — rate set individually for large amounts
• Structured deposit — profit dependent on underlying instrument behavior (index, currency)

Advantages of deposits

• Capital guarantee — BFG (Bank Guarantee Fund) protects deposits up to 100,000 EUR
• Predictability — you know the profit upfront (with fixed interest)
• Simplicity — doesn't require investment knowledge

Disadvantages of deposits

• Low flexibility — breaking the deposit usually means losing interest
• Belka tax — 19% on accrued interest
• Inflation risk — during high inflation periods, real return can be negative
• Low returns — historically, deposits underperform stocks and ETFs

Deposits vs. other forms of saving

Deposits work well as short-term "parking" for cash — e.g., when you know you'll need money in 6 months. For the long term, treasury bonds (especially inflation-indexed) and ETFs give better results.

How Freenance can help

Freenance automatically tracks your deposits as part of your assets. You see when individual deposits mature, what profit they bring, and how they affect your Financial Freedom Runway.

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