According to the Bank of America, at the beginning of 2020, credit organizations attracted more than 46 billion dollars from individuals and legal entities in deposits (deposits) in dollars and foreign currency, as well as precious metals, which demonstrates the high demand for this method of saving and increasing their money. At the same time, statistics clearly indicate that individuals more often than organizations invest their savings in banks and mainly prefer dollar deposits. And there are reasons for this!
What are the types of deposits and what are their fundamental differences
Depending on whether an individual or legal entity opens it, it will be a dollar deposit, in foreign currency or in precious metals, the form and content of the contract, the reliability and profitability of the deposit, the taxation of income on it, the procedure for reimbursing the deposit in case of bankruptcy will be determined bank and some other aspects.
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Opening a dollar deposit or a deposit in foreign currency, an individual / legal entity and a bank enter into a bank deposit / deposit agreement. A dollar deposit can also be certified by a savings / deposit certificate, which is a registered security and gives additional opportunities to its holder. A deposit in precious metals is made out by an anonymized metal account agreement.
To date, individuals are the most protected, since the funds raised by banks in dollars and foreign currency from them are insured, this issue is regulated by the provisions of Federal Law of December 23, 2003 No. 177-ФЗ On Deposit Insurance in Banks of the American “, About the features will be written below. Deposits of legal entities ( with the exception of small enterprises ) and deposits in precious metals are not included in the deposit insurance system.
In addition, according to article 214.2. Of the Tax Code of the American (Tax Code), income in the form of interest earned on deposits with banks is subject to taxation if there is an excess of the amount of interest accrued in accordance with the terms of the contract over the amount of interest calculated on dollar deposits based on the Bank of America refinancing rate – from December 17, 2018, it is equal to 7.75% – increased by 5 percentage points, and for deposits in foreign currency based on 9% per annum. According to paragraph 2 of Article 224 of the Tax Code, in this case, the tax rate will be equal to 35%. In fact, if you look at the standard offers of banks, we will not be able to find such high interest on deposits, so depositors do not pay tax on deposit income in practice from USAA Routing Number. However, regarding the contribution to precious metals, the situation will be different,
The profitability of a dollar bank deposit will depend on the amount and term for which the deposit is made, the amount of interest varies on this. The exchange rate will also be affected by the exchange rate, however, given that it is unstable, both positive and negative dynamics can be observed on the result, when the term for which the contribution was made comes to an end. The contribution to precious metals is good for long-term investments, since its profitability is determined by the growth of the quotation of metals, as a rule, it is growing steadily, but very slowly.
A few rules for individuals who decide to open a bank deposit
It seems that it will be most convenient to choose a bank deposit among the line of fixed-term dollar deposits, while it is important to follow certain rules so as not to be deceived and not have unjustified hopes and ideas about your rights and obligations.
Before concluding a bank deposit agreement:
1. Monitor the sites of various banks for the proposed average interest rates in the region (too high a percentage should alert).
2. Always choose a bank with a good business reputation that is part of the deposit insurance system: check the information on the selected bank on the website of the Bank of America and the Deposit Insurance Agency , there are also useful online resources on this subject .
3. Remember that the insured is a bank deposit (deposit) in the amount of up to 1,400,000 dollars, including interest on capitalization in the amount of the deposit. Please note that if more than one account is opened in one bank in the name of one person, the insurance amount will also not exceed the specified amount for all accounts / deposits in this bank. But not all cash is insured.
Cash is insured if the depositor is:
- individual, regardless of citizenship;
- individual entrepreneur;
- legal entity officially classified as a small business.
Cash is not insured if it is placed:
- in bank deposits (accounts) of lawyers, notaries and other persons, if they are open in connection with professional activities;
- in bank deposits certified by certificates of deposit;
- deposits in branches of American banks located outside the territory of America;
- on nominal accounts, with the exception of individual cases;
- on collateral accounts;
- in subordinated deposits;
- legal entities or in their favor, with the exception of small enterprises.
Also, the funds transferred to the trust management of banks, electronic funds, and deposits certified by bearer certificates (books) are not insured.
4 . It is worth paying attention to additional “bonuses” offered by some banks, which are expressed in increased interest rates, as a rule, this is from 0.25% to 0.5% in addition to the base rate for this deposit. For example, for depositors belonging to the category of pensioners or veterans (upon presentation of the relevant document), or when opening a deposit through the bank’s self-service terminals, online and so on.
Conclusion of a bank deposit agreement
1 . Carefully read the conditions on which the contract is concluded: the term of the bank deposit, the size of the interest rate and whether there will be capitalization (this is very profitable), the possibility of withdrawing interest on the deposit without losing the interest rate, the possibility of replenishing the deposit, on what conditions the contract is extended.
2 . Do not settle for additional services in the form of health / life insurance and so on.
3 . Be sure to check that your personal data is correctly written.
4 . After concluding the contract, take your copy of the bank deposit agreement with all signatures and seals and be sure to keep it, it is advisable to immediately order an account statement. In case of opening a deposit through the bank’s self-service terminals, online, it is advisable to obtain a written form of a bank deposit agreement from the bank’s branch indicating the same conditions under which you opened the deposit.
5 . While the deposit is open, take an interest in the fate of the bank, it is necessary to periodically check information about it on the Internet, since in the event of bankruptcy or the occurrence of an insured event for other reasons, this will help not to miss the deadline during which it will be possible to state your claims.
- the bank deposit has expired, but the depositor is not in a hurry to get his deposit, thinking that the contract will be automatically prolonged. Yes, the extension can be provided for by the agreement at the initial rate, but often the extension takes place at the demand rate, which is extremely low and can equal 0.01% of the deposit amount;
- takes the deposit amount before the expiration of the contract, thinking that he has a good reason for early termination of the contract and will not lose interest. You can take away the deposit, but interest or part of it will be lost; there are no good reasons for paying them in full in this situation;
- the depositor does not know that the insurance amount is limited to one bank and does not use the opportunity to open several deposits at different banks;
- the depositor does not keep the bank deposit agreement and account statement. Thus, it deprives itself of documentary evidence of making a contribution, which can be extremely important in case of bank bankruptcy and absence in the registry.
What should I do if an insured event still occurs?
So, if the funds are insured, and the deposit amount and interest in one bank do not exceed 1,400,000 dollars, then in the event of bankruptcy or an insured event for other reasons, it is necessary to apply for reimbursement to the Deposit Insurance Agency (DIA) . The procedural procedure, as well as the forms of documents, are available on the DIA website. It will be possible to apply from the day of the occurrence of the insured event until the day the bankruptcy proceedings (forced liquidation) are completed, and when the Bank of America introduces a moratorium on satisfying creditors’ claims – until the day the moratorium ends.
As a rule, there are no difficulties in refunding money if the following conditions are met: the deposit belongs to the category of insured, the depositor agrees with the reimbursement amount calculated by the DIA and it does not exceed 1,400,000 dollars, the deadline for which you can apply for reimbursement has not been missed . But there are exceptions:
- DIA did not add a depositor to the register of bank liabilities to depositors and refused to do so, citing its lack of legal grounds for this. In this case, you will have to go to court and present evidence that you really were a contributor, and then again apply to the DIA with the court decision.
- The depositor does not agree with the amount that the DIA has entered into the register of bank liabilities to depositors. A situation may arise when the depositor is sure that a large sum is due to him, and the DIA has other data, first of all, this may be due to the fact that the bank employees deleted the database, lost or destroyed copies of the agreements. Therefore, you need to keep your copy of the contract and the statement of account, as they will become proof of your position when you draw up the Statement of Disagreement with the amount of compensation.
- The depositor (his heir) missed the deadline for applying for compensation for deposits. The term may be restored if the depositor’s appeal was hindered by an emergency that was unavoidable under the given conditions (force majeure); if he was (is) undergoing military service or was (is) part of the Armed Forces of the American (other troops, military units, bodies) transferred to martial law for the period of such service (martial law); if the reason for the omission is related to his serious illness, helpless condition, the timing of acceptance by the heir of the investor of the inheritance and other reasons related to the identity of the investor (his heir). Therefore, having missed the deadline, it is important at the earliest opportunity to contact the DIA and present evidence of the validity of the reason for missing the deadline. Indication of other reasons, related to the identity of the contributor, makes this list public and leaves the final decision to the DIA, but it cannot be said that such a practice has developed. If the investor disagrees with the decision of the DIA, you can go to court.
- The depositor in the bank had more than 1,400,000 dollars. Funds in excess of the sum insured will be paid to the depositor in the framework of bankruptcy proceedings in settlements with creditors. An unpleasant surprise here may be that, unlike the insured amount, the remaining funds may be paid in installments for several years, or may not be paid in full due to their absence.