After a long dry spell, millions of savers were finally able to benefit from increased interest rates again in 2023. According to Oliver Maier from the comparison portal Verivox, it was a good year for most German savers. But it is questionable whether interest rates for overnight money etc. will continue to rise in 2024. There are already signs of a trend reversal in fixed-term deposits.
In 2023, savers benefited from an unprecedented series of interest rate increases by the European Central Bank (ECB) in the fight against high inflation. The interest of credit institutions in savers’ deposits increased again. The banks earn money by collecting higher interest rates on loans than they pay to savers.
However, according to an analysis by the Deutsche Bundesbank, banks and savings banks initially took more time than before to pass on interest to savers. Since September 2022, interest rate transmission has been even slower than in the past, the experts report in the Bundesbank’s monthly report.
In the meantime, inflation has eased, which has an impact on overnight money and the like. The falling inflation rate and the weakening economy are increasing pressure on the monetary authorities to lower key interest rates for the first time in the first half of 2024. The banks have already priced this into their fixed-term deposit conditions, explains Maier. After rising until November, fixed-term deposit interest rates have now fallen slightly again.
When it comes to overnight money, the comparison portal Verivox, which evaluates the interest rates of around 800 banks and savings banks, has not yet observed any falling interest rates on a large scale, but it is not expected that they will continue to rise, says Maier. The deadline for the evaluation was December 18th; experience shows that interest rates hardly change around Christmas.
Since the beginning of 2023, the average interest rates on the current account, which savers can access at any time, have almost quadrupled on average with offers available nationwide, from 0.46 percent to 1.70 percent. Depending on the credit institution, the interest is paid monthly, quarterly, semi-annually or annually.
For fixed-term deposits with a term of two years, savers currently receive an average of 3.30 percent interest, with a starting value of 2.17 percent at the beginning of 2023. The interest rates are therefore above the inflation rate, which was recently 3.2 percent. The average fixed-term deposit that earns interest generates higher returns than the money that loses value due to inflation.
Money is invested in a fixed-term deposit account for a set period of time. During this time, savers have no access to the money, which is why the interest rates are usually higher than with overnight money. At the end of the term, the money invested is paid back with interest. The consumer portal Biallo.de also provides information on interest on savings accounts.
Credit institutions that operate nationwide face greater competition and therefore often offer higher interest rates to attract savers. Although savings banks and cooperative banks have also increased interest rates, according to Verivox’s analysis, many regional credit institutions are lagging behind.
On average, savings banks recently paid 0.60 percent on overnight money – less than a quarter of the average interest that savers receive at banks operating nationwide. For the regional cooperative banks it is slightly less at 0.59 percent.
On average, regional credit institutions also offer lower interest rates for fixed-term deposits. With an investment amount of 10,000 euros, over a term of two years, according to Verivox calculations, this means 195 euros less interest income at savings banks and 173 euros less at local Volks- and Raiffeisenbanken as well as the PSD and Sparda banks.
According to Maier, many savings banks and Volksbanks trust that their customers will not switch to competitors, even if they could receive significantly higher interest rates elsewhere. Sparkasse President Helmut Schleweis, who retired at the turn of the year, warned in October that customers would be deterred by savings interest rates that were too low. Although it is impossible to pay high interest on all investments immediately in times of rapid interest rate changes, the impression can arise that thrift is no longer rewarded. This would eat away at the DNA of a savings institution.
Stocks: Verivox (eulerpool-AFX)
2023-12-31 15:02:38
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