"This is the highest deposit rate in Estonian banks since the country's euro adoption. By raising the interest rates on term deposits to a new record high level, we want to draw people's attention to the fact that the price of money has returned and today it makes sense to put your spare cash in a risk-free term deposit account to earn a profit," Paavo Truu, CFO of Coop Bank, said.

Truu said that as a fast-growing domestic bank, Coop Bank is interested in attracting deposits. "We also offer a competitive interest rate on demand deposits for individuals as well as businesses, i.e., current accounts, whereby customers can withdraw their money at any time," Truu added.

Swedbank has announced that it will raise the interest rate on annual term deposits to 4 percent from June 1.

"Most of home loans in Estonia are tied to the six-month Euribor, which is presently 3.746 percent. Swedbank's annual interest on your term deposit amount has risen to 4 percent, surpassing the present six-month Euribor rate, which is a significant development," Tarmo Ulla, Swedbank's head of loan department, said.  

The national Guarantee Fund guarantees the deposits of all private and business clients in Estonian banks, as well as the interest earned, up to €100,000 per depositor in a single financial institution, making interest on deposits a low-risk way of growing money.

Over the past year, Estonian household deposits have increased by 7 percent to reach €13.7 billion.

Even though the volume of term deposits has increased by €1.3 billion over the past year, they only account for 27 percent of all deposits. Two-thirds, or about €9.4 billion, are demand deposits, which earn a minimum annual interest rate of 0.01 percent.

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