Interest rate quoted per annum is the customary way of presenting interest rate i.a. on term deposits and savings accounts. Interest rate per annum is the gross percentage yield (with tax), which you will generate on a bank deposit, had the money been deposited on this deposit for 1 year. In this way you can easily compare the deposit offers of various banks.

Please remember that the actual yield on two deposits with the same interest rate will be different if the duration of the deposits differs. For example investing PLN 10,000 in a 3-month deposit with interest rate of 3.00% per annum and PLN 10,000 on a 6-month deposit also with interest rate of 3.00% per annum will generate gross yield (before tax) of 75 PLN and 150 PLN respectively (the calculations are tentative because of the possible difference in number of days during the life of a 3-month deposit).

Gains on bank deposits are subject to 19% income tax. On the Client’s behalf the Bank calculates the tax on a case-by-case basis and transfers the amount due to appropriate tax authorities.

Most bank deposits have a fixed interest rate. Fixed interest rate is defined when the deposit is being set up and remains unchanged until the end of the contractual tenor of the deposit. This allows the yield generated on a deposit after its end to be calculated with precision.

Variable interest rate applies mainly to savings accounts, however there are also bank deposits with such type of interest rate. Variable interest rate may change during the contractual tenor:

• due to specific triggers, including interest rates on the interbank market (WIBOR), or NBP reference rate or
• due to the interest rate formula used e.g. WIBOR 1M + 10 basis points, which means that the final interest rate on the product is WIBOR 1M plus 10 b.p. For example rate WIBOR 1M is 1.70%, and the interest rate is set once in a month, thus the eventual interest rate in a particular month will be 1.80% (WIBOR 1M + 10 b.p.). With change of WIBOR 1M to 1.50% in the next month, the interest rate will be reduced to 1.60%.

Choosing a renewable deposit means that after the end of the first contractual period (e.g. 3 months in case of a 3-month deposit) the deposit will be automatically opened for same consecutive periods until terminated. Subsequent renewals of the bank deposit will be made under terms stipulated in the agreement. After renewal of the deposit the accrued interest may be added to the deposit amount and keep generating further interest. It can also be transferred to a specified personal or savings account - then the amount of the bank deposit remains the same during the entire period and the investor can make use of the interest earned.