Automatically renewing deposits:
how they work

Choose an interest-bearing deposit to earn income and save time. When the deposit term expires, you usually have to go to the bank to withdraw your money or re-sign the agreement.

Is it possible to have the contract renew itself? It’s possible — auto-renewal. It’s a convenient option, but it’s important to understand how it works in practice. Otherwise, you could lose money. Let’s break it down step by step.

What is auto-renewal in simple terms?

Auto-renewal is the automatic extension of your deposit. When the term you opened the deposit for expires, the bank doesn’t close it. Instead, the system renews the agreement for the same term. And it does this without your personal intervention.

A simple example: you opened a deposit for one year on June 1, 2023. The agreement specifies an "automatic renewal" option. The deposit expires on June 1, 2024. Unless you visit the bank or provide other instructions, your agreement will renew on June 2, 2024. The funds will be deposited again for one year — from June 2, 2024, to June 2, 2025.

The main goal of this option is to keep your money working and free you from unnecessary hassle. Even if you forget the expiration date, your deposit continues to generate income.

How exactly does the extension work?

It seems simple, but there are several key points that must be checked in the contract.

1. How long is the extension for? Most often, the agreement is extended for the original term. If you opened the deposit for one year, the extension will also be for another year. However, there are exceptions, so it’s worth checking.
2. What’s the interest rate? This is the most important point! With automatic renewal, your funds are deposited not at your initial rate, but at the rate the bank has in effect for this type of deposit on the renewal date. This rate may be higher or lower than your initial rate.
3. What happens to the accrued interest? Typically, when you renew, the interest accrued during the first term is added to the principal. And new interest accrues on this increased amount. This is beneficial.

Example with numbers: you opened a deposit of 300,000 rubles for 1 year at 7% with annual interest payments and automatic renewal.

• First year (2023-2024) : You earned 21,000 rubles. The bank transferred this money to your card.
• Renewal date (June 2024) : the principal amount (RUB 300,000) is automatically deposited for the new year.
• Rate for June 2024 : the bank now offers 6.2% for the same type of deposit.
• Bottom line : your 300,000 rubles will work for another year, but at 6.2%.

What you need to do. A reminder for investors

To ensure that auto-renewal works to your advantage, rather than to your detriment, follow these simple steps.

Read the contract carefully when opening

Find the section on renewals. Check the new rate (often stated as "at the bank’s current rate on the renewal date") and the term of the loan.

Mark the expiration date

Set a reminder on your calendar 1-2 weeks before the date your original contract expires.

Compare rates

A week before the end of the term, check what interest rates your bank and competitors are currently offering on similar deposits.

Make a decision

If you find a better option, close or renew your current deposit a few days before the end of the term. If you’re happy with everything, just let the system do the rest automatically.

Automatic renewal is a useful and convenient tool that protects you from forgetting and keeps your money on the go. It’s ideal for those who don’t want to constantly monitor deposit maturity dates.