In search of better returns

Greek households have to tackle the constant erosion of their incomes due to high inflation on the one hand and the low interest rates on deposits, which in terms of time deposits remain stuck at 0.14% from 0.13% in July, when the first increase in interest rates by the ECB took place. 

Therefore the high inflation, which stood at 9.8% in September, and the low interest rates are eating into the purchasing power of money at a rapid pace.

Low deposit rates are not a Greek phenomenon. The corresponding European interest rates are also at low levels, which, however, have been moving upward lately as European banks have passed a part of the increase in interest rates onto deposit yields. 

Greek banks counter that European lenders had applied negative interest rates for the deposits of European citizens in the previous two years, a practice that the Greek banks had not followed then, keeping interest rates on deposits in positive territory. In any case, the discrepancy between interest rates on deposits and loans has blown up the interest margin of Greek banks, which, according to the figures of the Bank of Greece, came to 4.56% in September from 3.96% in August.

The prospects for better returns are now limited and focus mainly on insurance-type programs, which, however, require careful selection since they either involve risk, as they are investments in investment-type products, or require the commitment of money for long periods of time, in order to ensure the initial capital.

The insurance products in the market, many of which are available through banks, are of the mutual fund type and do not provide a guaranteed return or guarantee the initial capital if the policyholder sticks with the product for a long period of time. Products of this type are usually linked to stock indexes or baskets of stocks and can ensure high returns, but without commitment.

Other alternative options include sovereign debt issues, mainly through three-month or six-month treasury bills.