2024-07-12 03:32:22
Savers are threatened with a reduction in interest rates on their overnight deposits at several banks. A recent study shows which institutions are affected and where saving is least worthwhile.
The recent interest rate cuts by the European Central Bank (ECB) are now also being felt by savers. A study by the comparison portal Verivox shows that a total of 54 banks adjusted their interest rates for call money accounts downwards in June.
Among them are 19 regional banks and savings banks that were already offering minimal interest rates before the adjustment. On average across the country, the trend for high interest rates on overnight money is declining.
22 of the 54 credit institutions that have reduced their interest rates have reduced their overnight interest rates by 0.25 percentage points – the same amount as the ECB has reduced its key interest rates. At 30 banks, the interest rate cuts were smaller (between 0.05 and 0.23 percentage points), and two have reduced their overnight interest rates by more than a quarter of a percentage point.
In contrast, there are only three institutions that increased their overnight interest rates during the period under review. The overnight interest rates offered were evaluated on June 1 and July 1, 2024. The overnight interest rates for both dates could be determined for a total of 767 credit institutions. Seven percent of these banks reduced their interest rates during the evaluation period.
According to financial expert and Verivox managing director Oliver Maier, it is striking that among the banks that have cut interest rates, there are a disproportionately high number of banks that operate nationwide. 14 of a total of 86 national banks in the analysis cut interest rates in June. That corresponds to a share of 16 percent.
“Almost all interest rate cuts in this segment are attributable to credit institutions that pay above-average interest rates. Even after the interest rate cut, eleven of the 14 banks are still offering their savers between 2.25 and 3.75 percent interest on overnight money,” says Maier.
At banks that pay particularly high interest rates compared to the market, the margins are sometimes calculated so tightly that the credit institutions reacted quickly to the changed market conditions caused by the key interest rate cut and reduced their interest rates, explains the financial expert.
Only a few regional credit institutions such as savings banks and cooperative banks have reduced their interest rates. Of the 314 savings banks evaluated, 17 reduced their overnight interest rates in June, which corresponds to a share of just over five percent. Of the 367 regional cooperative banks evaluated, just over six percent (23 banks) reduced their interest rates.
However, among the banks in the regional sector that have cut interest rates, there are also a number of financial institutions where savers have previously received hardly any interest on overnight deposits. Nine savings banks and nine cooperative banks, which had already offered their customers low interest rates of less than one percent at the beginning of June, have now reduced their overnight deposit interest rates again.
“From the perspective of savers, it is annoying when banks that already pay little interest are now pushing their terms even lower at the first opportunity,” says Maier. “At the banks in question, overnight money investors have hardly benefited from the historically high interest rates of the last few months, but are now among the first to have to accept interest rate cuts. That doesn’t fit well.”
If interest rates on call money fall, customers always have the option of switching to another credit institution that offers better conditions. It is worth comparing. Interest rates of up to 3.49 percent are currently possible. Read here where you can find the best interest rates on call money and fixed-term deposits.
According to the study, the average available interest rate on overnight money in Germany is 1.70 percent. This corresponds to a moderate reduction of 0.02 percentage points – but the speed could accelerate with the upcoming ECB decision. Experts from the International Monetary Fund (IMF) recommend maintaining the course of interest rate cuts in view of declining inflation in Europe.
The national banks in particular are still trying to keep their interest rates at a high level so as not to lose savings to the competition. The adjustments are therefore being made with a sense of proportion, explains Oliver Maier. “At many savings banks and cooperative banks, however, the overnight interest rates are already so low that their profit margins are still large enough even after the key interest rate cut. They are under no pressure to pass the lower interest rates directly on to their customers.”