Lithuanian Household Deposits Surge as Public Favors Safety Over Returns

Lithuanians are increasingly placing their trust in bank deposits, with household deposit balances growing by 8% in April to reach 30.6 billion euros, according to the latest data from the Bank of Lithuania. This surge follows a similar trend observed by "Citadele" bank, which saw new term deposits increase by almost a quarter in April.

Rasa Narė, Head of Customer Experience Improvement for the Baltic States at "Citadele" bank, explained that this preference for deposits is a natural choice for individuals seeking clarity and security. "When receiving additional funds, people usually opt for clarity and stability rather than maximum returns. This is understandable – deposits are a familiar and easily understood financial instrument for many, helping to avoid the uncertainty caused by market fluctuations," Narė stated.

Narė also highlighted the flexibility of deposits, noting their high level of financial adaptability. Depending on the terms, funds can be withdrawn early or their use can be precisely planned, which is particularly useful for building an emergency fund or maintaining liquidity in an uncertain economic environment. The simplicity of deposits, requiring no prior investment experience or active management, makes saving accessible to a broad audience.

However, Narė cautioned that while deposits offer stability and predictable returns, they may not always protect against inflation. "If inflation remains higher than the interest earned, the purchasing power of money decreases. Therefore, deposits are more suitable as a means of ensuring stability and liquidity, rather than as the primary way to grow capital," she advised. She contrasted this with investment, which targets long-term capital growth with higher return potential but also involves greater risk and requires a longer time horizon.