Notes, SOFIPOs and interest-paying accounts: protection and risks
Besides CETES and bonds, there are accounts and notes that pay interest. The key is knowing who stands behind your money if the institution fails.
Many institutions offer "interest-paying accounts" or "notes" with attractive rates. They can be very useful for the emergency fund or short goals, but they're not all the same. The important question isn't just how much they pay, but what happens to your money if the institution runs into trouble.
Bank notes and bank accounts
A promissory note payable at maturity (PRLV) is a term deposit: you leave your money for 7, 28, 90 or more days and at the end you receive your capital plus interest. Banks also offer accounts with returns and daily access.
Bank deposits are protected by IPAB (the Institute for the Protection of Bank Savings) up to 400,000 UDIS per person per bank. If the bank fails, IPAB pays you up to that limit. UDIS change with inflation; Banxico publishes their daily value.
SOFIPOs
Popular Financial Companies (SOFIPOs) are savings and lending entities regulated by the CNBV. Many high-rate savings apps are SOFIPOs. They have their own insurance, the Protection Fund (PROSOFIPO), covering up to 25,000 UDIS per person in each authorized SOFIPO; that's much less than IPAB.
| Institution | Who protects | Up to (per person and institution) |
|---|---|---|
| Bank | IPAB | 400,000 UDIS |
| Authorized SOFIPO | Protection Fund (PROSOFIPO) | 25,000 UDIS |
| CETES and government bonds | No insurance: backed by the Federal Government | Not applicable |
| Investment funds and brokerages | No deposit insurance; your securities are held in your name in custody | Not applicable |
Why they pay more
An institution pays a higher rate when it needs to attract deposits to lend them, often to riskier customers. That doesn't make it bad, but the risk exists: if the loans it makes aren't repaid, the institution can get into trouble. That's why protection matters so much.
What to check before depositing
- That it's authorized and supervised: look it up in the CNBV registry or CONDUSEF's SIPRES.
- What protection it has and up to how much.
- The real rate: the annual one, after taxes and minus inflation.
- Conditions: whether the high rate applies only up to a certain amount, is promotional or requires a term.
- Liquidity: whether you can withdraw the same day or only at maturity.
How they fit with the rest
These accounts are a good tool for money you need available: emergency fund, goals under a year, or money waiting to be invested. For long-term goals, their real return is usually low compared with a mix of investments.
Test what you learned
1. Up to how much does IPAB protect your deposits in a bank?
- 25,000 UDIS
- 400,000 UDIS
- No limit
Show the answer
400,000 UDIS. It's per person and per bank.
2. What protection do savings in an authorized SOFIPO have?
- The same as a bank
- Up to 25,000 UDIS per person in each SOFIPO
- None
Show the answer
Up to 25,000 UDIS per person in each SOFIPO. It's provided by the SOFIPOs' Protection Fund.
3. An app promises a guaranteed 30% a year and isn't listed with the CNBV. What does that suggest?
- A great opportunity
- A fraud warning sign
- A normal SOFIPO
Show the answer
A fraud warning sign. High guaranteed returns outside regulated institutions are a classic fraud sign.
Track your progress in ARCO
With a free account you save the lessons you finish, your streak and your achievements, and answer the question of the day.
Everything in this section is educational: it explains how investing works, it doesn't tell you what to buy.