Frankfurt Although the prime and deposit rates in the euro zone have risen significantly, almost two-thirds of German credit institutions have so far not paid any interest on call money. In the case of savings banks, the share is almost three quarters. This is the result of an evaluation of the comparison portal Verivox, which is available to the Handelsblatt.
Of the 626 banks and savings banks, 397 have an overnight interest rate of zero percent. Verivox has checked these money houses because they offer money market accounts and publish the interest rates freely accessible.
Despite this development, the short-term interest rates that credit institutions pay their customers lag far behind. According to Verivox, the average interest rate for overnight deposits of EUR 10,000 at savings banks is currently 0.05 percent. At the cooperative banks it is 0.06 percent.
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Banks with nationwide offers, on the other hand, have raised interest rates in many cases and are now paying an average of 0.54 percent.
Trade Republic with two percent interest
In addition to the above, there are also financial institutions that offer significantly higher interest rates – around up to 2.2 percent. In some cases, offers like these are only aimed at new customers.
Two weeks ago, the Neobroker Trade Republic caused a stir: The financial start-up has recently started offering two percent annual interest on the money balances of its customers.
With the lucrative offer, the company wants to both retain existing customers and win new customers. For this reason, the interest rate offered also applies to both customer groups up to a credit balance of EUR 50,000. There is no time limit.
>> Read about this: Germans leave 1.4 trillion euros lying around without interest
And yet: Compared to the high inflation, the average overnight interest rates so far have been extremely low. In 2022, inflation in Germany reached a record high of 7.9 percent, as the Federal Statistical Office recently announced. For the current year, many observers expect further significant price increases.
First of all, direct banks and car banks are likely to raise their interest rates
“It’s a paradox – at the top of the market, banks are outdoing each other in the competition for new customers with ever higher overnight interest rates. On the other hand, many institutes still pay no interest at all,” says Oliver Maier, Managing Director of Verivox Finanzvergleich.
Oliver Geiseler, partner at the consulting firm Capco, expects the savings banks to wait before paying more for short-term deposits. “Most will introduce overnight interest rates relatively late in the market,” he suspects. The reason for this is the reluctance of many customers to switch. Not many of them quickly looked for a new provider that offered cheaper prices and interest rates.
In his estimation, therefore, direct banks and automotive banks should be the first to raise their interest rates, followed by private banks, followed by cooperative banks and finally the savings banks. “The fight for deposits has already begun, even if the savings banks and Volksbanks are not yet involved,” he says.
Some banks even still charge negative interest
One reason for the hesitant behavior of the savings banks and cooperative banks is that in the past they have often granted large amounts of construction financing – mostly with long-term credit commitments of ten years and more. In view of the very low key and capital market interest rates in the euro zone for a long time, the financial institutions have only received low interest rates on the building loans granted. If savings banks and cooperative banks were to raise their interest on deposits for customers, the bottom line would be their income would fall.
As a result, the financial institutions are likely to avoid higher overnight interest rates until their customers are flexible and switch to new providers.
It is also noticeable that banks and savings banks have already significantly raised interest rates, for example for new real estate loans. According to FMH financial advice, the ten-year building interest is currently just under 3.7 percent. In the autumn of last year, they had already exceeded four percent on average.
Consumer advocates criticize the behavior of the banks
This is exactly what has been criticized by consumer advocates. Michael Möller, investment and credit officer at the Finanzwende citizens’ movement, demands that banks pass on the higher interest rates to their customers, “especially after this long dry spell”.
“Finanzwende takes a particularly critical look at cases where interest rates on the credit side skyrocket while customers continue to get nothing on the deposit side,” he says.
Niels Nauhauser from the consumer advice center in Baden-Württemberg sees it very similarly: “In the lending business, the banks have long passed on the rise in interest rates, while in the deposit business they continue to fob off their customers with practically zero interest rates.” Banks would already charge around 1.9 percent interest among themselves pay for per diem.
Negative interest may even be charged
“Because banks don’t peg the overnight interest rate to a reference rate, they can set it arbitrarily depending on their business policy,” he says. The only option left to investors is to invest their money in another bank in order to collect higher interest rates.
Some banks are even still in defensive mode when it comes to overnight money. According to Verivox, there are 13 financial institutions that, according to their price displays, may charge negative interest. As a rule, these custody fees apply to higher sums, often from 100,000 or one million euros, but sometimes from 25,000 euros.
As long as the ECB deposit rate for banks was negative, many credit institutions charged their customers negative interest for higher deposit amounts.
More: Will interest rates peak in 2023?