What they are and types of deposits

A bank deposit corresponds to funds delivered to a credit institution, which is obliged to return the amount deposited, in accordance with the conditions that have been contracted, and in some cases to pay a remuneration.

Receipt of cash deposits and other amounts (such as cheques) is an operation that can only be carried out in Portugal by credit institutions registered with Banco de Portugal.

As a rule, bank deposits are based on the principle of contractual freedom. This means that:

  • within the limits of the law, each credit institution is free to define the characteristics and conditions of the deposits and respective deposit accounts that it provides;

  • credit institutions and the customer must agree not only on the content of the contract they intend to enter into, but also on the decision to contract;

  • in most cases, credit institutions are not required to open deposit accounts.

If the banking customer wishes to constitute a bank deposit, the credit institution may not make such a constitution dependent on the contracting of other products or services (i.e. tying is prohibited in Portugal).

The credit institution may, however, propose the optional purchase of other financial products or services as consideration for the improvement of the remuneration of the deposit or for the reduction or exemption of any costs associated with such deposit (i.e. in Portugal bundling is allowed).

In the case of an optional purchase of other financial products or services together with the bank deposit, the standardised information sheet provided to the bank customer by the credit institution must:

  • mention the basket of marketed products that are associated with the bank deposit;

  • explain the benefits of such joint contracting;

  • identify the impact of any changes to the composition of the basket, including interest rates, spread, commissions, expenses and other costs, as well as conditions of application, maintenance and revision of the product.

Each credit institution sells to the public different deposits and respective deposit accounts, which are distinguished by their liquidity, conditions of operation and objectives.

Current accounts are payment accounts and allow for the movement of funds deposited at any time.

When opening a current account, bank customers can usually access other banking products and services and use payment instruments such as payment cards, cheques, transfers and direct debits.

Since the accounts can be both debited and credited at any time, current accounts usually do not bear interest or do so at a very low rate.

The basic bank account and the standard account are current accounts.

In deposits redeemable at notice, funds can only be accessed once the account holders have informed the institution of their intention, in advance and in the manner previously agreed upon.

Time deposits entail the immobilisation of capital – in other words, the non-withdrawal of funds – for the period previously agreed upon (the term of the deposit), and are generally reimbursable in their entirety only at the end of that period.

Institutions often allow early mobilisation – that is, the withdrawal of funds – before the end of the term deposit. As a rule, this early withdrawal involves the application of a penalty on the amount of interest related to that period.

Time deposits usually offer higher remunerations than current accounts, which allow the withdrawal of funds at any time without penalty.

Time deposit interest may be paid periodically or only on the due date of the deposit.

Time deposits that cannot be mobilised in advance are time deposits that do not allow the early withdrawal of funds deposited, that is, before the end of the term deposit.

This means that bank customers will only have access to the amounts delivered to the credit institution on the due date of the deposit.

Special regime deposits are deposit accounts with specific purposes that may grant certain benefits:

  • Housing-savings account – A time deposit account that aims to provide funds for the acquisition and/or renovation of owner-occupied housing and which provides, among other advantages and through the verification of certain assumptions, access to credit for the said purposes (Decree-Law No. 27/2001).

  • Condominium savings account – A time deposit account constituted by the administrators of horizontally-owned buildings, which is intended to constitute a reserve fund for works in the common parts of the buildings. The movement of this type of accounts is restricted to the condominium administrators, who must be identified in the minutes of meetings of condominium owners where they were elected (Decree-Law No. 269/94).

  • Retired savings account – A time deposit account that has a special regime of exemption from interest tax (Decree-Law No. 138/86). The exemption is granted on the interest of the retired savings accounts, in the part whose balance does not exceed an amount defined annually in the State Budget. The account can be constituted as:

    • an individual account, by natural persons who are retired and whose monthly pension, at the time the account is constituted, does not exceed an amount equal to three times the highest national minimum wage;

    • a joint account, provided that the first pensioner is retired, his/her pension complies with the above conditions and that the other holders are the spouse or first-degree relatives (for example, children).

Based on contracts concluded with their customers, credit institutions may freely create deposit accounts with specific purposes or recipients, such as savings accounts for young people or emigrant savings accounts, which may have associated advantages, namely the exemption of payment of account maintenance fee, handling through cards and granting of credit.