In some cases from just 5,000 euros: more and more customers find themselves with negative interest rates

Status: 04/01/2022 10:20 am

It is getting harder for savers in Germany because the number of banks charging negative interest rates is increasing. In addition, more and more financial institutions are reducing their allocations.

At the end of March, 449 of around 1,300 banks evaluated demanded negative interest for amounts above a certain level in the call money or current account. This is how it emerges from a study by the Verivox comparison portal. Three months before there were 423 and a year ago only 281 banks. At the same time, according to the information, the trend continues towards lower and lower tax breaks, which are exempt from negative interest rates, which are also often called custody fees.

The consumer portal even identified 572 banks that charge negative interest on private deposits. He also noted the downward trend in tax relief.

legally controversial

“For a long time now, it’s not only particularly wealthy bank customers who have had to pay negative interest rates, but small and medium-sized savers are increasingly affected as well,” explained Oliver Maier of Verivox. Some banks charge a custody fee from as little as €5,000 or €10,000 on the demand, draft or clearance account. At least 175 credit institutions limited the granting of total credit to €50,000 or less. A year ago there were only 90 and at the change of the year 155 financial entities.

Consumer advocates generally view negative interest rates on private credit balances in checking and money market accounts as unacceptable. The Federation of German Consumer Organizations (vzbv) has therefore filed lawsuits against several credit institutions and is confirmed by the first rulings.

Escrow fees primarily affect new customers. If a financial institution wants to demand negative interest from existing customers, it must agree individually with those affected. Meanwhile, some banks have started to cancel accounts if customers disagree with the custody fee.

Banks demand different monetary policies

The banking industry is also not happy with negative interest rates. More recently, some had announced an end to negative interest rates as soon as default interest on bank deposits at the European Central Bank (ECB) was abolished.

The industry recently demanded that the ECB abolish negative interest rates this year. Negative interest rates are a crisis tool to combat the risk of deflation, said Christian Ossig, general manager of the Association of German Banks (BdB). “In the current environment, they are a completely wrong tool and they also send a completely wrong signal from monetary policy,” he noted. “The policy of negative interest rates must end this year.”

Negative since 2014

In 2014, the ECB lowered the so-called deposit rate below zero percent for the first time. Since then, banks have had to pay default interest if they deposit surplus funds with the central bank overnight.

The deposit rate is currently minus 0.5 percent. However, since the fall of 2019, the ECB has also granted waivers to banks, so late-payment interest is no longer due on all parked surplus funds.

In view of persistently high inflation, the ECB is pushing to exit its ultra-loose monetary policy. However, it leaves open the possibility that interest rates will rise.

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