Imagine gathering your finances month after month in a large financial reservoir. You do it honestly, with discipline. The problem of savings versus inflation today affects everyone who wants to protect their savings. But at the bottom of this reservoir, there is a tiny, almost invisible crack. Every day, a few drops leak out. A single drop doesn’t worry you, but after a year, you find there’s less in the reservoir than you expected. And after ten years?
This is exactly how saving in traditional banks works today. They are the leaky financial reservoirs that are slowly but surely devaluing your savings.
Security Versus Caring for Your Money
For decades, we were taught that the bank is the safest place for our finances. And in a way, it still is – your deposits are insured, and financial institutions are stable. In 2025, however, we must ask ourselves a different, much more important question: Is the bank also the place where my money is best taken care of?
The answer is increasingly a devastating “no.” Let’s look at the cracks in the system that are silently robbing you of the purchasing power of your savings.
Problem #1: The Illusion of Saving
Why Low Inflation Doesn’t Solve the Whole Problem
In mid-2025, it might seem that the worst is behind us. After years, inflation has returned to more acceptable numbers, and newspaper headlines are no longer full of warnings about rising prices. However, this temporary relief hides two dangerous truths about the real value of your money.
First Truth: The Damage from the Past Hasn’t Disappeared
During 2022 and 2023, when inflation in the Czech Republic reached double-digit figures, savings in current and savings accounts lost more than 20% of their real value. In 2024, inflation stabilized at an average of 2.4%, the lowest since 2018. But today’s low inflation does not compensate for this damage in any way.
Second Truth: Why Don’t We Realize the Continuing Loss?
The human brain is programmed to see the growth of numbers on an account as a success. When you see 255,000 Kč instead of the original 250,000 Kč, you instinctively feel that you have improved your situation. But this is a trap that economists call the “money illusion.”
The reality, however, is relentless. Even in today’s “calmer” period, when inflation seems under control, a process that can be called “silent confiscation” continues. Your money is growing on paper, but its real purchasing power is shrinking at a rate that few people realize. This battle with inflation thus remains relevant in 2025.
Imagine depositing 750,000 Kč into a savings account with a 2% interest rate.
- The Bank’s Offer: At the end of the year, you will have 765,000 Kč in your account. On paper, you have earned 15,000 Kč.
- The Reality of Inflation: Even with “low” inflation, for example 3.5%, the goods and services that cost 750,000 Kč at the beginning of the year now cost 776,250 Kč at the year’s end.
- The Result? Your 765,000 Kč in the account buys less than 750,000 Kč could have bought a year ago. Even in good times, you have lost 11,250 Kč in real value.
So the problem isn’t just what is happening to your savings today. It’s what has already happened to them, and the silent, relentless devaluation of deposits that continues even in times when it seems “everything is fine.”
Problem #2: The Cost of Inaction
The Missed Power of Compound Interest
Even more serious than the real loss is the so-called opportunity cost. By leaving money in low-interest accounts, you aren’t just losing a few thousand crowns a year. You are missing out on the most powerful tool for building wealth: compound interest.
Albert Einstein reportedly called it the eighth wonder of the world. It’s the principle where your returns generate further returns. It’s a snowball effect that grows on its own over time.
A comparison using our 750,000 Kč:
- The Path of Traditional Saving: After one year, you have 765,000 Kč.
- The Path of an Investor: You invest the money in a conservative mutual fund or a global ETF with an average historical annual return of, for example, 7%. After one year, you have 802,500 Kč.
The difference of 37,500 Kč in one year may not seem dramatic. But the magic happens over time.
After 10 years:
- If you stay with the bank (2% interest): approximately 914,200 Kč
- If you invest (7% return): approximately 1,475,400 Kč
The difference is almost 561,200 Kč. This is the price for leaving your money in a place where its value stagnated.
Of course, investing carries risk, and past returns are no guarantee of future ones. However, keeping money in an account with interest rates below the level of inflation is a guaranteed loss, not an investment risk.
Problem #3: The Labyrinth of Fees
A Masterpiece in Hidden Costs
If a bank cannot make money on the interest rate spread, it compensates with hidden fees. Their fee schedules are often a masterpiece of creative accounting. Imagine a typical trip abroad:
- At the airport: You withdraw the equivalent of 5,000 Kč from an ATM of a different banking group. Fee: 125 Kč.
- In a restaurant: You pay by card, and the terminal offers you a “favorable” payment in your home currency (so-called Dynamic Currency Conversion). You agree. The bank charges 3–5% of the transaction for this additional service at an unfavorable exchange rate.
- At the end of the month: You find out that you are paying another 150 Kč per month for the account management with a “package of benefits.”
These small, seemingly insignificant hidden costs act like a thousand tiny cuts. You barely notice them individually, but their annual sum represents a significant loss of thousands of crowns.
Problem #4: The Digital Facade
Why Your Banking App Feels Like It’s from the Last Decade
Using a traditional bank’s mobile banking is often like trying to control the latest smartphone with an old push-button Nokia. Sure, you can handle basic operations, but that’s often where the possibilities end. The apps are functional, but they are not intelligent. They lack the ease, speed, and sense of control offered by modern digital financial services.
Forget about meaningful expense tracking tools, instant and useful notifications, simple bill splitting with friends, or opening a new financial product in three clicks without having to study a fifteen-page PDF. Fintech players then easily step into this vacuum, offering not just an app, but a whole philosophy of financial management-simple, transparent, and fully in your hands.
Each of them targets a different weakness of traditional banks:
- For example,
Wise built its reputation on radically transparent international payments. Instead of hidden markups in exchange rates, which are common practice for banks, it offers the real mid-market rate with a single, pre-disclosed low fee. For anyone sending money abroad or receiving payments in a foreign currency, this is a revolutionary change in cost and clarity. - The German bank
N26, in turn, shows what modern, fully licensed digital banking should look like, without the frills. Its strength lies in its simplicity and clear budget management tools, such as “Spaces”-sub-accounts for separate savings goals. All this in a minimalist design that is the exact opposite of the cluttered and confusing apps of traditional institutions. - And the British
Revolut has become synonymous with the “financial super-app.” In a single interface, it combines instant multi-currency payments, simple investing in stocks or commodities, and savings accounts with daily interest-features that would require three different products, several meetings, and a lot of patience to set up at a traditional bank.
The common denominator is a radical focus on the customer and the removal of obstacles that traditional banks have considered standard for decades.
Your Plan for 2025: Three Steps to Better Saving
For generations, traditional banks have taught you passivity: “Give us your money, we’ll take care of it.” The year 2025 clearly shows that this model no longer works. It’s time to take control of your own finances and actively address the issue of savings versus inflation.
Step 1: Analyze Your Current Situation
Calculate how much your current banking costs you. Add up all the fees from the last 12 months and compare the real return with inflation. You might be surprised by the result.
Step 2: Explore Modern Alternatives
There’s no need to change everything at once. Start with one service-for example, international payments or modern mobile banking. Test how the new options suit you.
Step 3: Diversify Gradually
You can direct part of your savings into conservative investment tools or savings products with better returns. The rule is simple: your money should work at least as hard as you worked for it.
This doesn’t mean you have to close your bank account immediately. It means taking responsibility and stopping waiting for “someone else” to solve your finances for you. The market today offers countless options-you just have to look around.
