Traditional fixed term vs. UVA: which one wins the battle of the deposits

Time deposits rose again in June with a year-on-year increase of 3.9% in real terms, but the rise was not explained by traditional instruments and the repeated increases in interest rates, but rather by those that adjust for UVA were the great protagonists.

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Fixed term grape vs. traditional

After the last increase in rates, the traditional fixed term was left with a TNA of 69.5% and an effective annual yield of 96.5%, which is achieved by reinvesting interest every month.

However, throughout the year andThe yield of the fixed term was every month behind the inflationtherefore, the UVA began to take on more importance in the preference of investors.

UVA fixed terms are adjusted based on officially reported inflation and provide extra performance. At the expiration of the term, which is a minimum of 90 days, savers recover the capital together with interest based on the Indec CPI, plus an additional rate, which varies according to the bank, but is usually between 0.1% and 0. .2% per year.

The drawback with UVA fixed terms is that They are longer than traditionalwhich are deposited within 30 days. However, there is the option pre-cancel of the UVA to withdraw before of this term, but there the performance of the instrument falls and is even lower than that of the traditional one.

In June, the balance of deposits in national currency of the private sector increased by 12.9% in terms but 7.2% if measured in real terms, according to the report on banks carried out by the Central Bank.

UVA fixed terms are widely chosen by savers because they adjust for inflation

On the other hand, sight accounts increased by 10.5% in real terms in the month, reflecting the seasonal effect of the payment of the half bonus (16.3% nominal).

While, the balance of time deposits grew by 3.9% real and 9.4% nominal.

“The monthly dynamics of time deposits was explained in part by a Greater demand for time deposits in UVAinstruments that offer positive real returns and, to a lesser extent, for traditional fixed-term deposits and term investments”.

UVA precancellable vs traditional

Within the UVA segment, pre-cancellable placements accumulated a real increase of 16.4% in the monthwhile traditional deposits increased 5.5% real.

In this way, in the first part of the year the balance of UVA deposits increased by 67.5% in real terms, thus reaching the highest level -measured in homogeneous currency- since its launch.

From this performance time deposits in UVA reached 7.5% of the balance of time deposits in pesos of the private sector.

How to get a fixed term UVA

All savers who want to access the instrument can do so by following just a few simple steps:

  • In the first place, to constitute a UVA fixed term, as well as the traditional one, it is necessary have a bank account.
  • Then, through electronic channels, either using ATMs or home banking from a computer or the bank’s mobile application, you must enter the investment section.
  • There you must select the option to make fixed terms and then the type of instrument to which you want to subscribe, the amount to invest and the period of time. For its part, the bank must inform the details of the terms before the client considers the investment made.
  • By constituting the fixed term, the amount invested is automatically converted to UVAbased on the price of the moment. At the end of the investment period, the figure in UVA, whose price was updated during that period, will be converted back to pesos and will be available in the bank account, plus the corresponding interest.

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