One year after the start of the rapid turnaround in interest rates in the euro area, savers are still getting nothing at every fifth bank in Germany. 141 out of 738 money houses in the current evaluation of the comparison portal Verivox still have zero interest rates on overnight money (as of July 20, 2023). According to Oliver Maier, Managing Director of Verivox Finanzvergleich GmbH, almost all credit institutions quickly abolished their negative interest rates after the ECB’s penalty interest on bank deposits was abolished. “But even a full year later and after eight increases in key interest rates in a row, a considerable number of banks still offer savers no interest at all on their call money accounts.”
Driven by the extremely high inflation, the European Central Bank (ECB) increased interest rates in the euro area in July 2022 for the first time in eleven years. Because higher interest rates make loans more expensive, which slows demand and can counteract high inflation rates. The key interest rate at which banks can get fresh money from the ECB is now 4.0 percent. The euro currency watchdogs abolished the negative interest rate on deposits that banks park with the central bank a year ago. Banks are now getting 3.5 percent interest on deposits again. Another rate hike has been announced for the next ECB meeting on Thursday (July 27).
Above all, regionally active financial institutions remain with zero interest rates
The unprecedented turnaround in interest rates has made savings attractive again for banks and savings banks. Many institutes advertise for funds with ever new interest rate offers. According to the Verivox calculation, the average interest rate for call money offers nationwide is currently 1.31 percent. A year ago, interest rates were just above the zero line: at 0.05 percent at the beginning of August 2022. Fixed-term deposits with a two-year term therefore currently bring an average of 2.96 percent at banks that are active nationwide. That is almost four times as much as at the beginning of August 2022 (0.82 percent).
According to the Verivox evaluation, zero interest rates on call money accounts are still widespread, especially among regional money houses: 80 of 350 cooperative banks have a call money interest rate of 0.00 percent for an investment amount of 10,000 euros. That is almost every fourth institution (23 percent) from the group of Volksbanks and Raiffeisenbanks as well as the PSD and Sparda banks. In the case of the savings banks, call money investors go away empty-handed at 58 of 309 institutes, which is a share of around 19 percent. “In order to hold their ground in the competition for savings, the financial institutions operating throughout Germany feel compelled to constantly improve their conditions,” analyzed Maier. “Sparkassen and Volksbanken, on the other hand, speculate much more on the loyalty of their customers.”
In a recent analysis, the Bundesbank also came to the conclusion that banks are sometimes taking more time than in the past when passing on the ECB interest rate hikes to savers. Consumer advocates from several federal states recently called on savings banks to “accept deposits from consumers in the amount of the statutory deposit guarantee and to pay interest on them”. At a conference in early July, bank representatives defended themselves against accusations that the increased interest rates were being passed on to savers too hesitantly. “In fact, we have protected most of our customers from negative interest rates for many years,” said Cornelius Riese, co-head of the leading cooperative institute DZ Bank. After the “paradigm shift” of the rapid turnaround in interest rates, the banking sector “now needs a certain adjustment phase until the system is in balance again”.