End of negative interest rates: Most banks are abolishing custody fees

Many bank customers can breathe a sigh of relief: Four weeks after the first interest rate hike in the euro area in years, the vast majority of credit institutions have abolished negative interest rates on overnight money or current accounts.

According to data from the comparison portal Verivox, at least 79 financial institutions are still showing negative interest rates in their price lists, but more than 80 percent of the institutions concerned have canceled the so-called custody fee for private customers, as can be seen from the evaluation of around 1,300 banks and savings banks.

In view of the high inflation, however, savers currently have little reason to celebrate.

"The vast majority of banks reacted quickly after the interest rate hike and abolished their negative interest rates," says Oliver Maier, Managing Director of Verivox Finanzvergleich GmbH.

In the case of many cooperative banks and savings banks in particular, the negative interest rates were linked to the deposit rate of the European Central Bank (ECB) and thus automatically ceased to apply when the new key interest rates came into force on July 27th.

Maier expects other institutes to follow suit in the coming weeks and months.

According to data from the consumer portal Biallo, 35 banks still have negative interest rates in their price display or on their website.

At the peak at the end of May, 582 of the banks and savings banks surveyed still demanded a custody fee, often amounting to 0.5 percent if certain sums were exceeded in the account.

With the interest rate hike by the ECB, the penalty interest of 0.5 percent that banks had to pay if they parked money with the central bank was also eliminated.

The financial industry complained about billions in charges because of this interest, many financial institutions passed this on to private customers from a certain sum on the account.

Because of the ECB interest rate hike, savers can hope for rising interest rates for fixed-term deposits and the like.

The first providers are already advertising special conditions for new customers, says Maier.

However, the high inflation is now gnawing at the savings, even the offers with the highest interest rates are far from offsetting the current inflation rates.