Savers in Germany: Missing Out on Massive Interest Income
Published: August 10, 2024, 3:13 PM
Savers in Germany are potentially missing out on a massive opportunity to earn interest on their money. While interest rates have slightly decreased from their recent highs, they remain high compared to historical levels. Despite this, many savers continue to keep their money in accounts with low interest rates, leaving potential earnings on the table.
An analysis by the Weltsparen platform reveals that Germans hold over €2.8 trillion in their accounts, with more than half in checking or call money accounts that yield a meager 0.6% interest per year. In contrast, overnight money or short-term fixed-term deposits currently offer over 3.5% interest. This discrepancy creates a significant gap in potential earnings.
At an interest rate of 3.5%, the €1.7 trillion in sight deposits in Germany could generate approximately €60 billion in annual interest. At the current 0.6% rate, the yearly income would be a mere €10 billion, with an estimated loss of €50 billion in potential earnings.
While some Germans have responded to high interest rates by investing in fixed-term deposits, a significant portion of savings remain in low-yielding accounts. Financial expert Katharina Lüth of Weltsparen emphasizes the importance of maximizing interest by avoiding low-interest accounts and prioritizing long-term fixed-term deposits or investments for longer-term savings.
For those comfortable with market fluctuations, investing in the stock market through exchange-traded index funds (ETFs) offers the potential for even higher returns over the long term.