Households shift savings into bonds and cash holdings, marking a notable economic shift
Category: Business
In a surprising turn of events, Russian households have begun withdrawing money from fixed-term bank deposits for the first time since the panic triggered by the Kremlin’s mobilization drive in 2022. This shift, highlighted in a recent report, indicates a broader change in consumer behavior as falling interest rates prompt savers to seek alternative ways to store and grow their wealth. According to data from the Central Bank of Russia, funds held in fixed-term deposits dropped by 288 billion rubles (approximately $3.97 billion) in March, marking the first monthly outflow from these accounts since October 2022.
This withdrawal trend reflects a larger economic narrative where lower borrowing costs and diminishing returns on deposits are reshaping the financial habits of Russians. With deposit rates easing from recent highs, many consumers are increasingly looking for investment opportunities, big-ticket purchases, and cash holdings. The Central Bank noted that total bank holdings rose by only 0.3% in March, a growth solely attributed to current account balances rather than stable deposits.
As interest rates decline, the appeal of fixed-term savings products has diminished significantly. Analysts point out that this has encouraged households to redirect their funds into higher-yielding financial assets or to make purchases of durable goods, a shift that authorities hope will stimulate economic activity. Economic Development Minister Maxim Reshetnikov remarked that the share of household income directed toward savings had reached a record 16.6% last year due to elevated rates but predicted that this rate would decline as returns fall, leading more money into consumer spending.
In March, car sales surged by 30.6% year-on-year, followed by a 15.1% increase in April, illustrating how the shift in savings behavior is translating into increased consumer spending. Concurrently, cash in circulation increased by 0.3 trillion rubles ($4.14 billion) in March and an additional 0.6 trillion rubles ($8.28 billion) in April. This rise in cash demand has also been linked to internet outages and disruptions to cashless payment systems, prompting individuals to withdraw physical cash.
As of April 1, Russians held a staggering 67.4 trillion rubles ($930.1 billion) in banks, with 46.9 trillion rubles ($647.2 billion) in fixed-term accounts. Yet, a study by consultancy Frank RG revealed that new money is no longer flowing into the savings market. In 2025, growth in household savings products was driven almost entirely by accrued interest income, which contributed 15.5% to growth, with net new inflows at a mere 0.4%. This starkly contrasts with the previous year when interest payments accounted for approximately 60% of total growth.
Under Russia’s Civil Code, depositors can withdraw funds from fixed-term accounts at any time, sacrificing only accrued interest. Most Russians, who typically place deposits for less than six months, often choose to wait for their accounts to mature rather than renewing them. The long-term deposits that expired in March were likely opened during a period of high interest rates, which peaked in late 2024 and early 2025. Since then, deposit rates have retreated to levels last seen in November 2023.
Economist Yegor Susin noted that a gradual unwinding of excess savings is already underway, with some funds likely shifting into demands for cars and other purchases. The sentiment among consumers appears to be changing, as evidenced by a survey conducted by Frank RG, which found that 27.5% of Russians would continue using deposits even if returns decline, whereas 24.8% indicated they would explore alternative financial products, and 21.2% expressed intentions to begin spending their accumulated savings.
Analysts at MMI have observed that deposit rates have now fallen close to inflation expectations among Russians. They stated, “It is too early to say deposits have lost their attractiveness. But the fact that their appeal is declining is undeniable.” Retail investors have increasingly turned to bonds, with Russians purchasing 139 billion rubles ($1.92 billion) in corporate bonds in March and 157 billion rubles ($2.17 billion) in April, alongside an additional 80 billion rubles ($1.10 billion) in federal government bonds. This trend positions them as the largest buyers of sovereign debt on the secondary market.
Preliminary data from the Central Bank suggests that deposit outflows have ceased without turning into meaningful inflows. New additions to household accounts and deposits totaled an estimated 1.2 trillion rubles ($16.56 billion), mainly driven by early social benefit payments ahead of the May holidays. The Central Bank indicated that inflows into ruble-denominated household accounts accelerated due to growth in current accounts, but balances in fixed-term deposits remained largely unchanged.
As the economic climate continues to evolve, the implications of these shifts in savings behavior could have lasting effects on Russia's financial system. The interplay between consumer spending and savings strategies will be closely monitored by economists and policymakers alike. With the Central Bank yet to publish full April data, it is uncertain how these trends will manifest in the coming months.
In a country where financial decisions are increasingly influenced by external factors, such as internet reliability and government policies, the recent withdrawal trend marks a potentially seismic shift in how Russians manage their finances.