- Advertisement -

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Brazilians withdrew from their savings accounts in record numbers in January, registering the largest overall net monthly withdrawal since the Central Bank started to record its data in 1995. Last month, clients took out R$161.59 billion from savings accounts while deposits totaled R$149.56 billion.

Brazil, Rio de Janeiro, Brazil News, Banking, Savings Account
Brazilian savings account register record withdrawals in January 2016, photo internet recreation.

In 2015, accumulated interest rates on savings accounts was lower than the annual inflation, and these types of accounts registered a negative balance of R$53.56 billion. Overall, the total volume of revenues deposited in savings accounts at financial institutions is a little over R$646.6 billion.

In addition to the wailing economy, surging inflation and increasing unemployment have left Brazilians with little money left over to invest. Last year inflation index reached 10.67 percent, while government statistics showed that more than 9.1 million persons were looking for jobs last year.

With savings accounts having one of the worst returns, analysts say those Brazilians with money to invest prefer other types of investments, mostly short-term ventures, such as fixed income funds.

Interest rates for savings accounts are determined by the government at 0.5 percent per month (6.17 percent per year) plus the reference rate (TR). In 2012, with the benchmark interest rate (Selic) falling to one digit numbers and interest rates for savings accounts made it one of the most attractive investments in the country.

The Brazilian government then changed the way in which the annual rate of interest was calculated on new deposits to the country’s national savings program. This led investors to migrate to other investments. Now that the is at 14.25 percent not even the 0.5 percent interest rate is bringing investors back to savings accounts.

- Advertisement -

1 COMMENT

LEAVE A REPLY

six + seven =