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Banks offer higher interest rates and eliminate account fees. For many customers it remains a losing proposition.
Author: Stefan Frühauf and Hanna Wey
Since the Swiss National Bank initiated the interest rate turnaround in autumn 2022, the banks’ interest business has been going smoothly. This is shown by the annual reports of various cantonal banks that are being published these days. However, for a long time customers had little of it. The interest rates on their bank accounts hardly increased and the fees didn’t move either.
Banks pass on interest rate reductions to customers more quickly than if interest rates were increased
This comes as little surprise to Suzanne Ziegler, Professor of Banking and Finance at the ZHAW. After years in a negative interest rate environment, the banks waited a long time in favor of interest margins and profits: “Who will be the first to move? “The banks pass on interest rate cuts from the SNB to customers more quickly than if interest rates were increased,” said Ziegler.
effort for the customers
In addition, changing banks involves effort. “Customers have set up standing orders, especially for private accounts that are used for everyday payments,” says Benjamin Manz, managing director of the online comparison service Moneyland. As a customer, you would rather not change. The bureaucratic hurdles don’t help either. «In the EU and Great Britain you need to be able to switch an account to another bank with just a few clicks. That’s what the regulations provide for.” According to Manz, this would also be welcomed in Switzerland.
Manz advises that it makes sense to compare the conditions regularly and, if necessary, to open savings and private accounts at different banks. There are big differences when it comes to interest rates and fees, as a comparison from Moneyland shows:
If you add up fees and interest against each other, the analyzed providers end up with a plus for the customers. But only at first glance. Inflation in Switzerland was 1.7 percent in December and even 2.1 percent for the whole of 2023. It often eats up the income. The banks did not want to comment on this today when asked by SRF.
More competition
After all, competition for customers seems to be intensifying. At the end of December, ZKB abolished all account fees for private customers. The St. Galler and Thurgauer Kantonalbank have already followed suit. Interest rates are increased and new customers are lured with special interest rates. An important reason for this is digitalization: “Better comparability puts providers under pressure,” says Benjamin Manz. In addition, digital banks often offer their accounts for free.
Digitalization and better comparability are putting providers under pressure.
Customers are not served by reducing fees alone, says Professor Ziegler: “It would be better if the banks actually passed on interest rate increases. The fees are potentially less significant, especially with larger amounts in the bank accounts.”
Legend: For many households, the budget has become tighter due to the current circumstances. If every franc counts more, the incentive to take a closer look at your own bank’s interest rates and fees also increases. KEYSTONE/Georgios Kefalas