Deposits and Habits: Why Do We Let Money Sit Idle?

According to Bank of Estonia data (as of 31 July 2025), household deposits have continued to grow. By the end of July 2024, households had €12.4 billion in banks. A year later, the figure had risen by 9% to €13.6 billion. The majority of this money (71%) is sitting in current accounts, where the growth has been strongest (+15%), reaching €9.7 billion by the end of July. Meanwhile, the volume of term deposits has fallen by 3% to €3.9 billion.

“At the end of July last year, the average interest rate on a 12-month term deposit in Estonia was 3.7%,” explains Kaspar Kalvet, CEO of Holm Bank. “If the €8.4 billion that households then held in current accounts had instead been placed into a one-year term deposit, it would have earned almost €310 million in interest over the year. The calculation is of course simplified, but the scale of the number does make you wonder: perhaps people don’t see growing their savings as important, or maybe there are other reasons?”

Kalvet illustrates the point with a broader comparison: “To put it figuratively, with that kind of sum – and the income tax it would generate – you could patch quite a few holes in household and state budgets. That could mean, for example, higher salaries for teachers and rescue workers. And there would still be money left over.”

Inflation adds another layer to the picture. “It’s a fact that inflation in Estonia has been climbing month by month this year, reaching 6.1% in August. It won’t remain that high forever, but when you compare current deposit rates with inflation, the outcome is understandably frustrating,” says Kalvet. “But there’s another side to it. Let’s say someone has €5,000 in spare cash. After a year, with today’s inflation, that money would be worth around €4,700 in real terms. If instead it were placed in a term deposit at, say, 3% interest, the person would earn €150. Inflation would still eat into the value, but the loss would be smaller – the deposit would help recover about half of it.”

Different people have different situations and preferences, Kalvet notes. “Everyone should run the numbers for themselves and see what makes sense in their case. Some are more willing to take risks and go after different investment opportunities. For those who prefer a safe and stable way to preserve value, term deposits are worth considering. And it’s not just households – businesses too can benefit by setting aside funds earmarked for future investments and letting them earn interest in the meantime. In Estonia, deposits are guaranteed up to €100,000 by the Guarantee Fund.”

„If you don’t want to tie up all your money for one fixed period, you can spread it across several deposits with different maturities. If you then need to use some of the money, you can end one of the deposits while the others keep earning. And if you are thinking about a term deposit, it makes sense to look around and compare interest rates across banks to find the best offer,“ Kalvet points out.