Inflation erodes the value of money kept at home, and the longer cash sits idle, the more it loses buying power. Prices for goods and services rise, while savings remain largely stagnant, notes Roman Khoroshev, the CEO of crowd-lending platform JetLend, as reported by socialbites.ca.
He points out that current annual inflation runs around 9 percent. In contrast, interest rates on deposits and savings accounts are higher. If someone deposits 100,000 rubles in a savings account at an average 10 percent per year, the balance could reach about 121,000 rubles after two years. If the rate is 15 percent, that amount could grow to roughly 132,000 rubles by 2026. These illustrations show how, in a rising-rate environment, savings accounts can outpace inflation, preserving and growing real value over time.
Moreover, savings accounts offer flexibility: funds can be added at any time, without freezing the money. In contrast, cash kept at home does not earn interest and sits at risk of losing value. After two years, 100,000 rubles kept as cash may effectively shrink in purchasing power to an amount closer to 80,000 rubles if inflation remains high. Sanctions do not affect ruble deposits, though many current withdrawal restrictions primarily impact foreign currency accounts, according to Khoroshev.
The expert also highlights the practical danger of keeping cash at home. Beyond the risk of loss due to fire or theft, there is the ongoing threat of erosion in value as prices rise, making physical cash a poor long-term store of wealth in a high-inflation environment.
Recently, the Central Bank increased the key rate to a range of 16 to 18 percent per year, underscoring a monetary policy aimed at curbing inflation and stabilizing the currency. This move influences borrowing costs, investment decisions, and the relative attractiveness of different savings vehicles, encouraging households to consider instruments that can better preserve real value over time, rather than relying on cash held under a pillow. It also signals that savers may benefit from higher-yield options, while borrowers face tighter financing conditions, creating a balance between saving and spending that households must navigate with care.