Banknotes (symbolic image)
Photo: Jens Büttner / dpa
One year after the start of the rapid turnaround in interest rates in the euro area, savers at one in five banks in Germany are still left empty-handed. At 141 out of 738 financial institutions, there are still zero interest rates on overnight money, as a recent evaluation by the comparison portal Verivox shows.
Almost all credit institutions have quickly abolished their negative interest rates after the abolition of the ECB penalty interest rates on bank deposits, said Oliver Maier, Managing Director of Verivox Finanzvergleich GmbH. "But even a whole year later and after eight key interest rate hikes in a row, a considerable proportion of banks still offer savers no interest at all on their call money accounts."
Banks are once again vying for savings
Driven by extremely high inflation, the European Central Bank (ECB) raised interest rates in the euro area in July 2022 for the first time in eleven years. In the meantime, the key interest rate, at which banks can obtain fresh money from the ECB, is 4.0 percent. When banks park money at the central bank, they currently receive 3.5 percent interest on deposits. A further rate hike has been announced for the next ECB meeting on Thursday (27 July).
The unprecedented turnaround in interest rates has made savings attractive again for banks and savings banks. Many institutions are constantly advertising for deposits with new offers. According to the Verivox calculation, the average interest rate of nationwide overnight money offers is currently 1.31 percent.
750 euros interest in six months
Some providers now pay interest of three percent or more: especially to new customers.
This adds up to a lot of money for savers – as a small example calculation shows: With an investment amount of 50,000 euros and 3.0 percent interest for six months, the income amounts to 750 euros.
A year ago, interest rates were only just above zero: at 0.05 percent at the beginning of August 2022. Fixed-term deposits with a two-year term currently yield an average of 2.96 percent at nationwide active banks. This is almost four times as much as at the beginning of August 2022 (0.82 percent).
The 0.00 percent institutions
According to Verivox, zero interest rates on call money accounts are still widespread, especially among regionally active financial institutions:
Of 350 cooperative banks, 80 have an overnight interest rate of 10.000 percent for an investment amount of 0,00 euros. This is almost one in four institutions (23 percent) from the group of Volks- und Raiffeisenbanken as well as the PSD and Sparda banks. In the case of savings banks, overnight money investors are left empty-handed at 58 out of 309 institutions, which is a share of around 19 percent.
"In order to assert themselves in the competition for savings, the financial institutions operating throughout Germany are forced to improve their conditions again and again," Maier analyzed. "Savings banks and cooperative banks, on the other hand, speculate much more on the loyalty of their customers."
In its own analysis, the Bundesbank also recently concluded that banks are sometimes taking more time than in the past when it comes to passing on ECB interest rate hikes to savers. Consumer advocates from several federal states recently called on savings banks to "accept and pay interest on consumer deposits in the amount of the statutory deposit insurance".
At a meeting in early July, bank representatives defended themselves against accusations that the increased interest rates were being passed on to savers too hesitantly. "In fact, the vast majority of customers have been protected from negative interest rates for many years," said Cornelius Riese, co-head of the central cooperative institution DZ Bank. After the "paradigm shift" of the rapid turnaround in interest rates, the banking sector "now also needs a certain adjustment phase until the system is back in balance".
Savers can take advantage of this "adjustment period" by shifting their money to banks that pay them decent interest rates. Our columnist Hermann-Josef Tenhagen has written down how to do this here.