Posted by Alexander Avtanski on June 23, 2009, 2:07 pm
Hello,
I am going to travel to Bulgaria for a few months and I was looking to
open an checking account in a local bank for convenience. While
looking at that, I found something surprising and somewhat disturbing
- the CD rates of all major banks there are sky high. And I'm talking
_really_ sky high, up to 12% APR or so. Here is one example, from the
UniCredit Bulbank (which is UniCredit group subsidiary):
http://www.unicreditbulbank.bg/weblayout/groups/bulbankwebsite/documents/bbproductdocument/growing_interest_en.pdf
More UniCredit rates here:
http://www.unicreditbulbank.bg/bulbank/en/Individual_Clients/Deposits/index.htm
If it was only one bank, I could understand - maybe they are desperate
and trying to collect capital. But all the banks have similar CD
rates. Or if it was rate only for the local currency (BGN) - but
rates are similar for deposits in Euros too.
What's wrong here? Doesn't look sustainable to me... Any clues what
might be going on?
Regards,
- Alex
Posted by Rod Speed on June 23, 2009, 2:52 pm
Alexander Avtanski wrote:
> I am going to travel to Bulgaria for a few months and I was looking
> to open an checking account in a local bank for convenience.
Credit cards work very well now.
You do need more than one in case it gets lost or stolen etc.
> While looking at that, I found something surprising and somewhat
> disturbing - the CD rates of all major banks there are sky high. And
> I'm talking _really_ sky high, up to 12% APR or so. Here is one example,
> from the UniCredit Bulbank (which is UniCredit group subsidiary):
>
http://www.unicreditbulbank.bg/weblayout/groups/bulbankwebsite/documents/bbproductdocument/growing_interest_en.pdf
> More UniCredit rates here:
>
http://www.unicreditbulbank.bg/bulbank/en/Individual_Clients/Deposits/index.htm
> If it was only one bank, I could understand -
> maybe they are desperate and trying to collect
> capital. But all the banks have similar CD rates.
That always happens, you never get one bank with dramatically different rates to
the rest.
> Or if it was rate only for the local currency (BGN)
> - but rates are similar for deposits in Euros too.
> What's wrong here?
Thats the effect of the US completely imploding the entire
world financial system and the resulting credit crunch.
Hordes have moved to US treasurys for safety so banks
like that have to offer very high rates to get any money.
> Doesn't look sustainable to me...
Yes, Bulgaria could well implode very spectacularly indeed like Iceland has.
> Any clues what might be going on?
Just the meltdown of the world financial system.
Thats another reason for using credit cards in your home currency instead.
Posted by Dan Birchall on July 29, 2009, 4:23 am
avtanski@gmail.com (Alexander Avtanski) wrote:
> I am going to travel to Bulgaria for a few months and I was looking to
> open an checking account in a local bank for convenience. While
> looking at that, I found something surprising and somewhat disturbing
> - the CD rates of all major banks there are sky high. And I'm talking
> _really_ sky high, up to 12% APR or so.
I've seen similar things (or even higher) in some developing countries
or emerging economies in Africa. My understanding of it is that
liquidity is so low in these places, and the economies so risky, that
the banks have to offer crazy rates to get people to actually deposit
their money (thus letting the banks loan it out and help build the
economies).
In first-world economies, people will put their money in the bank without
such incentives. :)
-Dan
--
Screaming in Digital - http://scream.org/ - Queensryche fandom since 1991.
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> to open an checking account in a local bank for convenience.