Fixed terms: How much can you earn on a $ 100,000 deposit after the rate hike

The Central Bank decided Thursday, as expected and more after the August inflation data, an interest rate hike which thus went from 69.5% to 75% and will take effect this Friday. This has a negative impact on ordinary peoplefor example because it makes the loan more expensive, as well as when you invest a part of your savings on a fixed-term basis in local currency.

In this way, with the new floor of the nominal annual rate (TNA), fixed terms of up to 10 million pesos per 30 days they will have a monthly yield of 6.25% and effective annual yield (TEA) of 107%.

In practice, if a person made a fixed term for 30 days of $ 100,000, at the end of the term they would receive $ 106,250, which is the $ 100,000 they had initially deposited plus an interest of $ 6,250.

If you deposit $ 50,000 instead, the interest is halved. That way, after a month, he would make about $ 3,125. That number grows if, upon renewal, the initial deposit is reinvested plus the interest.

In this way, if at the end of that period you decide to set a new fixed term for another 30 days with the initial money, $ 50,000 plus the $ 3,125 you earned, at the end of that renewal you would have earned about $ 1,195. And so on. If he fixed term was $ 106,250, an interest of $ 6,640 would have to be added.

If no changes were made to the interest rate during the following year and if before each expiration the person made a new fixed term for one month, with initial capital and accrued interest, in 12 months he would earn an interest of $ 107,000.

With the latter hike and if the rates remain unchanged from now until the end of the year, taking as an example the deposit of $ 100,000 renewed every 30 days, and comparing it to the rates as they were up to this Friday, the difference is $ 10,000 more.

According to Banco Provincia’s time deposit simulator, if they deposited $ 100,000, they would earn interest of $ 6,369.86 after one month; If you take the principal plus interest and put it on for another 30 days, you would get interest of $ 6,775.55 at the end of the term. If you later placed $ 106,775.55.

If you were to reinvest everything you’ve earned so far plus the initial $ 100,000 at the end of the third month, your amount would be $ 120,351.11. If I repeated the same action until the age of one year, the capital in 12 months would be: $ 209,801.79

Third rate increase

This is the third rate hike applied by the BCRA in the past two monthsafter the Leliq rate rose 800 points on July 28, which went from 52 to 60% per annum, and on August 11, a 950-point increase was set to reach 69.5% per annum.

New interest rates The Central Bank justified the rise in interest rates to “thus consolidate the process of normalizing the structure of active and passive interest rates in the economy to place them on positive ground in real terms”.

The rate increase has a direct impact on all credit portfolios granted and in particular on credit card statements.

The decision of the board of directors of the monetary authority aims to support the policy of achieving a positive real interest rate (i.e. higher than inflation) as agreed with the IMF.