Deposit interest rates are rising: how much extra money this brings you
ERR reported on 1 October 2026 that interest rates on term deposits in Estonian banks have risen, with one-year deposits now reaching around 2.5 percent, while most money still sits in current accounts earning no interest at all. This matters to anyone with savings on a bank account that currently earns nothing.
What happened and when
ERR reported on 1 October 2026 that deposit interest rates at Estonian commercial banks have grown alongside rising Euribor, and the increase is likely to continue. According to Bank of Estonia data, the average interest rate on term deposits in August was 2.1 percent, compared to 2.05 percent the previous month and 1.97 percent a year earlier. Interest rates on one-year deposits have now risen to around 2.5 percent, with both Swedbank and SEB currently offering a one-year term deposit at that rate.
At the same time, deposit volumes have grown by one billion euros over the year, or 7.5 percent, according to Bank of Estonia statistics. However, Swedbank's head of retail banking Tarmo Ulla noted that 72 percent of the bank's clients still live paycheck to paycheck. A large share of savings continues to sit in a current account with low or zero interest, rather than somewhere that actually earns a return.
What this means for money sitting in a current account
Money kept in a current account generally earns no interest at all. According to ERR, Swedbank offers clients who want to keep their funds liquid a savings account with 1.75 percent interest, which is lower than the 2.5 percent term deposit rate but still better than nothing. The gap between 2.5 and 1.75 percent is 0.75 percentage points, which adds up to a noticeable amount over a year for larger sums.
It's important to understand that a term deposit means locking up your money for an agreed period, for example 12 months, as in the Swedbank example. This suits money you won't need in the near future, not an everyday emergency buffer you might need to access quickly.
A worked example: 5,000 euros in a term deposit
Suppose someone has 5,000 euros in savings currently sitting in a current account earning no interest. If they place it in a one-year term deposit at 2.5 percent interest, as described in the ERR source using both the Swedbank and SEB examples, they earn 5,000 x 0.025 = 125 euros in interest over the year. This is a simple multiplication rather than compound interest, since it covers only a one-year period.
If the same amount were left in the lower-yielding 1.75 percent savings account instead, the return would be 5,000 x 0.0175 = 87.50 euros per year. The difference between the two options is 125 - 87.50 = 37.50 euros per year, showing that there is a real price difference between locking money into a term deposit and keeping it freely accessible in a savings account. For a more precise, personalised calculation, including longer periods and larger amounts, you can use a compound interest calculator to see how interest accumulates over time, or a savings goal calculator if your aim is to reach a specific savings target.
Why interest rates are rising at all
Bank of Estonia economist Taavi Raudsaar explained to ERR that banks need to offer higher interest to attract deposits because the overall market interest rate has risen, and banks themselves have to pay more for the money they then lend out. According to Raudsaar, the Euribor outlook is leaning upward, so term deposit interest rates will likely rise further over the next couple of years.
This is directly linked to the situation of borrowers too, since the same rise in Euribor that benefits savers simultaneously increases monthly payments on loans with variable interest rates. Anyone wanting to know how a change in Euribor affects their home loan payment can work it out using a home loan calculator.
Who benefits from higher deposit interest
Higher deposit interest mainly benefits those who already have a financial buffer or savings they won't need in the near future. According to SEB's head of savings and investments Elisabet Visnapuu, the growth in deposit volumes is driven not only by higher interest rates but also by the removal of the so-called tax hump, which increased people's net wages, as well as growing awareness of the need for a financial buffer.
At the same time, as Tarmo Ulla told ERR, a large share of people still live paycheck to paycheck, and a term deposit isn't a relevant option for them right now. But for those who do have free money sitting in an account, it's worth considering whether it belongs in a current account or would earn more in a term deposit or similar interest-bearing product.
Source: ERR, Hoiuste intressid tõusevad, kuid säästud seisavad endiselt arvelduskontodel (2026-10-01)
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