Negative interest rates on private bank deposits are largely history, but not for all bank customers. Consumer advocates are sticking to their lawsuits against the so-called custody fee for the time being.
Many bank customers can breathe a sigh of relief: Four weeks after the first interest rate hike in the euro area in years, the vast majority of banks have abolished negative interest rates on overnight money or current accounts. According to data from the comparison portal Verivox, at least 79 financial institutions still have negative interest rates in their price lists. This means that more than 80 percent of the institutions concerned have canceled the so-called custody fee for private customers since the interest rate hike, as can be seen from the evaluation of around 1,300 banks and savings banks.
In view of the high inflation, however, savers currently have little reason to celebrate. “The vast majority of banks reacted quickly after the interest rate hike and abolished their negative interest rates,” reported Oliver Maier, Managing Director of Verivox Finanzvergleich GmbH (as of August 17). In the case of many cooperative banks and savings banks in particular, the negative interest rates were linked to the deposit rate of the European Central Bank (ECB) and thus automatically ceased to apply when the new key interest rates came into force on July 27th.
“The end of negative interest rates is sealed,” said Maier. He expects other institutes to follow suit in the coming weeks and months. “At the latest after the next change of quarter, at most a handful of banks will still be charging negative interest rates in private customer business.” According to data from the consumer portal Biallo, 35 banks are still showing negative interest rates in their price displays or on their website (as of August 10). At the peak at the end of May, 582 of the banks and savings banks surveyed demanded a custody fee, often amounting to 0.5 percent when certain amounts in the account were exceeded.
On July 21, the ECB raised key interest rates in the euro area for the first time in eleven years in response to record inflation. This also eliminated the penalty interest of 0.5 percent that banks had to pay if they parked funds at the central bank. The financial industry complained about billions in charges because of the penalty interest, many financial institutions passed this on to private customers from a certain sum on the account.
Consumer advocates consider negative interest rates on private assets in checking and money market accounts to be inadmissible, regardless of whether they are new customers or existing customers. Six lawsuits by the Federation of German Consumer Organizations (VZBV) against various banks are currently pending. There are first judgments, but they are not yet final. “One can only hope that the industry will take the so-called interest rate turnaround as an opportunity to say goodbye to this legally very controversial instrument without further injunctions from us or the consumer centers,” said VZBV legal officer David Bode. “Without appropriate procedural explanations, however, the proceedings will be pursued.”
At the same time, Bode criticized the financial sector’s justification for the negative interest rates. “Due to the considerable exemptions granted to institutions since 2019, we consider the alleged connection with interest on deposits at the ECB to be at least partially advanced.”
Because of the ECB interest rate hike, savers can hope for rising interest rates for fixed-term deposits and the like. Several financial institutions are currently trying to attract new savers with special conditions. If you open a new money market account there, you will receive a surcharge on top of the regular interest rate for several months. The top banks with such special offers currently pay 0.5 percent on the call money and guarantee at least this interest rate for a period of 6 months.
The best money market accounts in comparison.
If you can invest your money for 2 years, you will receive 1.75 percent interest at Ford Bank. This means that the Kölner Autobank currently offers the highest interest rate among German banks. For comparison: At the beginning of April, local financial institutions paid a maximum of 0.41 percent.
The best fixed deposit accounts in comparison.
But even the offers with the highest interest rates do not by far compensate for inflation, Maier complains.
Verivox evaluates the conditions for call money, giro and clearing accounts from around 1,300 banks and savings banks on the Internet. Since not all institutions publish their interest rates freely accessible on their website, there could be other institutions that still charge negative interest rates.
