Status: 07/15/2022 08:45 a.m
The era of negative interest rates is coming to an end. The number of banks that are completely or partially abolishing the so-called custody fee for private customers is increasing. Is it worth saving now?
Fewer and fewer banks are charging negative interest. Even before the expected first key interest rate increase in the euro area in eleven years, at least 49 financial institutions had completely or partially abolished the so-called custody fee for private customers. This emerges from an evaluation of the comparison portal Verivox of around 1,300 banks and savings banks.
However, many banks are still waiting. According to the data, at least 426 credit institutions are still charging negative interest above certain amounts on the call money or current account (as of July 14). “As soon as the central bank removes the penalty interest rate on bank deposits, the negative interest rates for savers will also disappear across the board,” expects Oliver Maier, Managing Director of Verivox Finanzvergleich GmbH. “A historic interest rate phenomenon is coming to an end”.
ECB tightens monetary policy
The background is the expected tightening of monetary policy by the European Central Bank (ECB) next Thursday (July 21). In view of the record inflation, the ECB wants to raise the key interest rates in the euro area by 0.25 percentage points. In September, the central bank held out the prospect of another, possibly larger rate hike. Banks still have to pay 0.5 percent interest if they park funds at the ECB. Many financial institutions pass the costs on to customers.
Several large institutions, including Deutsche Bank, have already announced that they will reduce negative interest rates for their customers in line with ECB decisions. According to Verivox, many banks and savings banks automatically reduce the negative interest rates in the event of an interest rate adjustment anyway, because they have expressly linked the custody fee to the ECB deposit rate.
The results in detail
According to the evaluation, 34 financial institutions have already completely abolished their negative interest rates since the end of April. The allowances were increased significantly at another 15 institutions, so that at least the majority of customers no longer have to pay negative interest. Another institute has decided to abolish it completely, and negative interest will no longer apply on August 1st.
In addition to online banks, the financial institutions that have initiated the turnaround include many regional institutions, including several Sparda and PSD banks as well as Volksbanks and savings banks.
Is it worth saving again?
The foreseeable end of negative interest rates is good news for bank customers. Due to the ECB interest rate turnaround, savers can also hope for rising interest rates for fixed-term deposits and the like. “If interest rates rise in the future, the business with savings deposits will become attractive again for the banks. The first institutes are already positioning themselves for this,” explained Maier.
However, the high inflation is now gnawing at the savings, it eats up the interest income. Because the so-called real interest rate – that is, what remains of the interest rate taking into account the inflation rate – is clearly in the negative range. In order to generate a real return, the interest rate would have to be higher than the inflation rate, otherwise the money invested will continue to lose value.
For 2022 as a whole, the Deutsche Bundesbank expects an inflation rate of 7.1 percent in Europe’s largest economy. According to its forecast updated yesterday, the EU Commission now anticipates inflation for the current year of 7.6 percent in the euro area and even 7.9 percent in Germany.