Term deposit
When you know you will not need money for a long time, you can deposit it once on a term deposit.
You leave the agreed amount in the bank for the agreed period.
Interest is only around 1%.
The calculation of interest can be using simple interest – annually bears interest only on the amount deposited,
or using the more frequently used compound interest – annually bears interest from the situation from the previous year.
Simple interest
Kn = K0*( 1+i*n)
Compound interest
Kn = K0*( 1+i)n
K0 = deposit,
Kn = account balance after n years
n = year
i = interest rate pa
Saving
If you have some extra money a month, you can save it for savings.
This means that you deposit, for example, CZK 600 into your account every month.
Classic savings – the most frequently used, the least risky, you can withdraw money from it at any time.
Interest only around 0.01%.
Saving in funds – it is riskier (so you can lose some percentage).
Interest even 10-20 % per annum – if you’re lucky.
However, you cannot withdraw money from them free of charge. Your money is worth your interest every month.
Credit
A credit is a loan from a bank.
Consumer credit – most often it is for a smaller amount that you can use for anything, but you pay much higher interest.
Mortgage, resp. a home loan – is also a loan, but for a larger amount that you have to use to buy an apartment, house or its construction.
The interest rates are significantly lower than with a consumer loan and you usually repay it for more than 20 years.
Interest rate
The amount saved after … years