Bulgarian banks (with few exceptions) pay no interest on deposits
Once a centre of high-interest deposit accounts, Bulgaria is now what Switzerland was 20 years ago – zero interest rates on bank deposits in all major banks. Many foreigners are baffled as to why Bulgarian banks seem not to want any fresh capitals. American and Western European banks attract customers with 4-5% interests, while banks in Bulgaria pay nothing. And at the same time, Bulgarians don’t see to be bothered. So if you are an expat living in Bulgaria, what should you do? Where can you park your money without the feeling that you have been robbed by Bulgarian banks by not paying you anything on your deposits?
Why Bulgarian banks pay no interest on deposits
With very few exceptions from some small banks, the big banks in Bulgaria don’t pay any interest on deposits. The reason for this is quite complex, but it comes down to the simple fact, that Bulgarian banks have an excess of liquidity. In other words, they have too much cash on their balance sheets. And they are also making huge profits in the last years.
The main reason for the excessive liquidity is due to the fact, that Bulgarians are not used to invest in financial instruments on the stock exchange. They instead opt for real estate, which has skyrocketed in the post covid years. But real estate is not enough to fully absorb the money coming from the central bank’s printing machine. And the printing machine is working on full steam, in line with the ECB and the Fed’s policies. So overall there is more money in Bulgaria than the financial system can process efficiently. And as Bulgarians are busy buying apartments for investment, they really don’t expect from their bank to pay them interests on their deposits.
In fact, because of the zero interest policy of the European Central Bank in the past decades, we now have a whole new generation that simply doesn’t know that once upon a time, there was such thing as deposit account.
The solution
So is there a solution to the zero interest problem in Bulgaria? There certainly is, but it’s not as simple as many would like it to be. One can earn a nice interest from Bulgarian banks, but he should know very well how to approach them. Especially if he is a foreigner. There are also very interesting options on the Bulgarian stock exchange as well as in completely tax-free ETF’s.
Bulgarian Golden Visa
But that’s not all. Did you know that some of the most reliable investments can also qualify you for Bulgarian Golden Visa? In all cases, should you have some spare capital and feel uneasy that Bulgarian banks don’t pay you nothing for your money, please contact us to schedule a consultation.