Sought-after interest rates: overnight and fixed-term deposits: savers can find the best offers here | message
Shares in this article
by Simone Gröneweg, Euro am Sonntag
D.As is well known, agobert Duck likes to bathe in his money. Most savers do not yet indulge in this hobby, but like the cartoon character, they like to save a lot. The cause of the recent savings boom is easy to explain. Whether visiting the restaurant, the cinema or the hairdresser – none of this has been possible or hardly possible in the past few months. Accordingly, the wallets were spared. Those who have fewer opportunities to spend money put more aside accordingly. The problem: many park their money in non-interest-bearing checking and savings accounts. According to DZ Bank, there were already almost two trillion euros at the end of last year.
The balance sheet of such deposits is bitter. The key interest rate of the European Central Bank (ECB) has been hovering around zero percent since March 2016. Banks that park money at the ECB have to pay 0.5 percent penalty interest. Accordingly, the financial institutions have greatly reduced their interest rate offers to savers.
Negative interest rates are increasing
A wave of negative interest rates is now even rolling towards savers. More and more credit institutions are asking their customers to checkout if they want to stash their money safely. So far, the banks have mainly cashed in overnight money accounts. According to a current analysis by the finance portal Verivox, 329 banks are currently charging negative interest rates from private customers. Most of the time it is a negative interest rate of 0.5 percent. Commerzbank and Targobank also hit the headlines recently, because they charge negative interest even to new customers on savings accounts from a certain exemption amount, which banks usually prefer to call custody fees.
As if that weren’t enough, inflation is also nibbling on savings. In April consumer prices were two percent above the level of the same month last year. The direct bank Comdirect regularly calculates what inflation means for conservative savers. In the first three months of 2021, the interest rates for overnight and fixed-term deposits, current accounts and savings deposits averaged just 0.11 percent in this country, while the inflation rate was 1.36 percent. “This results in a real interest rate of minus 1.25 percent,” write the financial experts. So this is the interest that savers earn after deducting inflation. This means that the German savings deposits have lost 8.1 billion euros in value over the period.
Nothing will change in the overall situation for the time being. “Even if there has been a lot of talk about rising interest rates in the financial markets in the last few weeks, you have to make a clear distinction between key interest rates from central banks and capital market rates,” emphasizes Carsten Brzeski, chief economist at ING Germany. Long-term capital market rates have recently risen due to higher inflation rates and the – expected – economic upturn. “The central banks have made it clear, however, that they will not react to higher inflation by raising their key interest rates and will ignore this rise for the time being,” says Brzeski.
While the situation may seem frustrating to conservative savers, they should make the most of the situation. Sometimes it is about keeping the losses as low as possible. FMH-Finanzberatung has therefore selected the currently most attractive offers for fixed-term deposits, overnight deposits and long-term investments for € uro am Sonntag. The following applies: If you want to benefit from such offers, you usually have to react quickly – the conditions often change very quickly. Money houses repeatedly advertise new customers or simply attract attention with limited interest rate promotions.
When it comes to overnight money, the Bank of Scotland is currently attracting attention. The institute pays bonus interest of 0.4 percent for all deposits made there by May 28th. This is available for three months in addition to the base rate of 0.1 percent. Openbank is also coming up with a special offer. Until June 16, customers there will still receive 0.5 percent for overnight money. The digital bank belongs to the Spanish Open Bank, which is based in Madrid. As an online bank, the big bank from Estonia also offers savings products to customers in Germany. After all, it still pays 0.4 percent for deposits in call money accounts. The big bank is also at the top of the table with its conditions for fixed-term deposits and long-term investments.
Note deposit protection
The assets invested in the Estonian bank are subject to statutory deposit insurance. That means: In the case of bankruptcy, all account holders have a legal right to a refund of their money up to a sum of 100,000 euros. At Bank11, on the other hand, which pays 0.1 percent on overnight money, the extended security applies. The bank is a voluntary member of the deposit protection fund of the Association of German Banks. There savings in the millions are protected.
The example of Greensill Bank shows that investors should be careful where they stash their money. The daughter of a British-Australian financial conglomerate was particularly noticeable in this country with more attractive terms for overnight money, but had to file for bankruptcy in March. The private investors were lucky in the misfortune: The financial supervisory authority Bafin officially established the compensation case a few hours after the opening of the insolvency proceedings. The deposit insurance took effect. According to the Association of German Banks, private investors at Greensill were not only covered by the statutory deposit insurance scheme, but claims were also served via the deposit insurance fund.
Sparkasse Düsseldorf takes action
After this bankruptcy, there was criticism of interest portals such as Zinspilot or Weltsparen, because the Greensill Bank in Bremen also advertised on such sites. Above all, the portals have discovered investing abroad as a business model and only act as an intermediary. Savers can invest relatively easily in other countries via the platforms and switch offers unbureaucratically.
Consumer advocates advise caution, however, because they are particularly critical of offers from economically troubled countries. The worse the creditworthiness of a state, the higher the probability that its security systems will not work. And you have to rely on it in the case of bankruptcy. If you want to avoid such imponderables and stay with your house bank, you also have to arm yourself. Numerous institutes have already introduced negative interest rates.
The Sparkasse Düsseldorf pulled this through pretty consistently. The money house looks after more than 405,000 customers and introduced a custody fee of 0.5 percent. For existing customers there is an allowance of 100,000 euros, for new customers it is 50,000 euros. Initially, the bank wrote to 1,800 customers with more than 250,000 euros in overnight money and current accounts. An individual solution was found for 99 percent of customers, says a spokesman for the bank. Either money was reallocated or the custody fee was accepted.
Five victims did not respond. The bank remained consistent: The money of these customers in the amount of 2.43 million euros they transferred to the district court. Customers with assets of more than 130,000 euros are currently being contacted in a second round.
The example shows how uncomfortable it is for savers. You have to expect the bank to come to you. “In the case of existing customers, the institutes need the consent of the customer in order to be able to charge negative interest,” explains Frankfurt law professor Tobias Tröger. They cannot introduce them unilaterally. This also applies if the bank would like to be remunerated for the safekeeping of customer funds. “In this case, the banks have to change the contractual relationship with the customer and conclude a real custody agreement. However, such a contract change requires the customer’s consent without exception,” adds Tröger.
Presumably, many savers will be contacted by their banks in the coming months. “Anyone who has a lot of money in their accounts should arm themselves in principle before going to talk to the bank advisor,” advises financial expert Sascha Straub from the Bavarian Consumer Center. One possibility: Customers can distribute their money to different accounts in order to comply with exemption limits. However, you have to keep an eye on other costs such as account management fees, says Straub.
He warns that particular caution is required when the bank is promoting its own financial products. “On the one hand, it makes sense, of course, to invest the savings in other areas. However, you should inquire whether the advertised products are really good,” says the consumer advocate. Otherwise, the situation for investors could get worse. “For example, if someone invests in overpriced, poorly performing funds, they may end up losing even more money.”
If you switch to another bank, you have to come to terms with the new provider’s conditions. Experts therefore advise savers willing to switch to caution. As a rule, the financial institutions will let the new customers directly admit that they can introduce negative interest, which is hidden behind the more sober-looking word custody fee.
Deposit insurance in general
If a bank in Europe becomes insolvent, account holders will automatically receive their money back up to a sum of 100,000 euros. They have a legal right to this. For married couples with a joint account, the limit is 200,000 euros. This applies to credit balances on current, daily and time deposit accounts. Consumers should know, however, that the European Union has laid down the rules for this, but the deposit insurance is in the hands of the individual countries. Banks from non-EU countries can also be organized completely differently. If you want to invest your money there, you should definitely familiarize yourself with the regulations of the respective countries.
Selling your home, receiving severance pay after you quit, or entering retirement age – in such life situations, there can be a large amount in your account. If such special circumstances exist, a security limit of up to EUR 500,000 applies in the event of the bank’s insolvency for the customer. The increased scope of protection only applies for six months from the event to be covered.
The deposit protection fund of the Association of German Banks (BdB) protects customers’ assets at private banks in Germany. If you have lost more than 100,000 euros as a result of bankruptcy, the security for the excess amount is currently available. After the Greensill Bank bankruptcy, she had to take about three billion euros in hand to compensate investors. The amount that is insured for each customer depends on the liable equity of the respective bank. Information is available at www.bdb.de.
Savings Banks and Co
All public savings banks, Landesbanken and Landesbausparkassen as well as cooperative banks belong to institution-related security systems. If an institute is doing poorly financially, it will be supported by the other association members until it is solvent again. More information can be found on the Internet at www.dsgv.de and www.bvr.de.
Image sources: Jakub Krechowicz / Shutterstock.com, Joachim Wendler / Shutterstock.com, Finanz Verlag, Finanz Verlag