Consumers can currently benefit from falling inflation and rising interest rates. According to an analysis by Verivox, there are some offers for fixed-term deposits with interest rates above the inflation rate. That wasn’t the case for a long time.
For savers in Germany, there are currently the first fixed-term deposit offers with interest rates above inflation. Some providers pay interest on fixed-term deposits with a term of one year, which at 4.75 percent is above the inflation rate of 4.5 percent in September. This emerges from an evaluation by the comparison portal Verivox. “The return of positive real interest rates is an important turning point for savers,” said Oliver Maier, Managing Director of Verivox Finanzvergleich GmbH.
According to Verivox, the highest interest rates come from banks in other European countries. Investment amounts of up to 100,000 euros are protected throughout the EU by statutory deposit insurance. Banks with German deposit protection pay a top rate of 4.15 percent.
Real interest rates are on average deep in the red
On average, however, the real interest rate, i.e. the interest after deducting inflation, is still at minus 1.18 percent for fixed-term deposits (as of October 20th). This means that the loss of value due to inflation is greater than the capital gain due to interest.
However, according to Verivox, the era of rising interest rates could soon be coming to an end. “There are currently many indications that fixed-term deposit interest rates will soon have reached their peak,” said Maier.
Daily money is hardly worth it
According to information, many investors have hardly benefited from rising interest rates when it comes to overnight money. At 27 percent of the 747 banks and savings banks evaluated by Verivox with at least one daily money offer, savers receive a maximum of 0.25 percent interest. At some institutions they continue to receive nothing.
“The ECB’s deposit interest rate is higher than ever before in the history of the eurozone,” said Maier. “But many regional banks in particular are still not passing on the high interest rates to their customers.” The deposit interest rate is currently 4.0 percent. The deposit interest rate is the interest rate at which banks can invest money with the ECB.
From the perspective of Sparkasse President Helmut Schleweis, overnight money is more of a “money storage” than an investment. In contrast to fixed-term deposits, savers can access daily money at any time. Banks and savings banks would therefore find it difficult to calculate with these funds, Schleweis recently said. “You can see that in the interest rate offered.”
ECB interest rate decision
For the analysis, Verivox evaluated the conditions of around 800 banks and savings banks for an investment amount of 10,000 euros. All credit institutions with daily and fixed-term deposit offers that published their interest rates freely accessible on their website were taken into account. The consumer portal Biallo.de also offers an overview of interest on savings investments.
The interest rate policy of the European Central Bank (ECB) is also crucial for the allocation of interest rates. In the fight against high inflation, the ECB has raised interest rates in the euro area ten times in a row since July 2022. The current key interest rate is 4.5 percent. Higher interest rates make loans more expensive, which can slow down demand and counteract high inflation rates. Higher key interest rates therefore have a negative impact on the economy.
Economists expect the monetary authorities to leave interest rates unchanged at their meeting today. Inflation has recently weakened while concerns about the economy are growing.