Money After Rate Hike
Experts warn of traps in call money offers
Status: 19.06.2023 | Reading time: 3 minutes
Negative interest rates are a thing of the past: despite better offers from banks, savers should check them carefully
Credit: pa/CHROMORANGE/Matthias Stolt
After the latest interest rate hike by the European Central Bank, experts are expecting even better offers for overnight money accounts in the near future. But they also warn against some clauses that are included. In addition, other interest rate investments are now becoming increasingly attractive.
The European Central Bank (ECB) raised interest rates again on Thursday. The so-called main refinancing rate, at which commercial banks can borrow money from the ECB, rose by 0.25 percentage points to four percent. And that should not be the end of the road.
“It is very likely that we will raise interest rates again in July,” said ECB President Christine Lagarde at the press conference after the interest rate decision. “We have not yet reached the destination of our journey.” That will only be achieved when the ECB’s inflation target of two percent is in sight again. In May, the inflation rate was 6.1 percent in both Germany and the euro zone.
As a result, savers can hope for even higher interest rates for overnight money. Even before the latest interest rate hike, the best offers were around 3.35 percent. Now the threshold of 3.5 percent could fall. The catch: Most of these offers have significant limitations.
also read
“As with past interest rate hikes, we expect that many banks will only pass on the higher interest rate in the form of bait offers that are limited in time, usually only apply to new customers and are limited to certain amounts,” says Kim Felix Fomm, financial expert at Savings platform WeltSparen.
also read
As a result, the interest actually paid is usually much lower in the end, because after the temporary top interest rate has expired, customers fall back on the much worse conditions for existing customers. For example, TFBank is currently paying 3.35 percent, but only for four months. After that, there are only 1.3 percent. The Openbank falls from 3.3 to 1.0 percent after six months, and the Comdirect also falls from 3.25 to 0.75 percent after six months.
The effective annual interest rate is therefore far lower than the lure offers suggest, warns Katharina Lüth from Fintech Raisin. If three percent per year is offered, but this only applies for three months, that does not result in 10,000 euros for 300 euros, but initially only 75 euros. How much is added depends on the subsequent interest rate, but in the end it is certainly less than 300 euros. Consumers should therefore always read the fine print.
also read
And they should be willing to switch providers more often, i.e. to do overnight money hopping – after all, it is usually extremely easy to open a new account these days. The Postident procedure can now also be completed via video conference, and it is even easier for those who have activated the electronic function of their ID card. The new account is available within a few hours and the money can be moved to the provider with the better conditions. In this way, savers make optimal use of the banks’ fight for new customers.
However, Kim Felix Fomm also advises taking a look beyond overnight money offers and targeting fixed-term deposits. “Banks and investors are currently assuming that interest rates will fall again in the medium to long term, and inflation expectations for the next three years have recently fallen again to 2.5 percent,” he says.
Accordingly, the interest rates for fixed-term deposits with maturities of two, three or five years are unlikely to rise again, in the medium term they will even fall again, and it could therefore make sense to secure the current interest rates for several years. Up to 3.6 percent is currently being offered at the top.
also read
So if you want to save yourself the trouble of constantly changing overnight money providers and have no problem investing your money for several years, you can include such offers in your financial planning.
This is where you will find third-party content
In order to display embedded content, your revocable consent to the transmission and processing of personal data is required, since the providers of the embedded content as third-party providers require this consent [In diesem Zusammenhang können auch Nutzungsprofile (u.a. auf Basis von Cookie-IDs) gebildet und angereichert werden, auch außerhalb des EWR]. By setting the switch to “on”, you agree to this (which can be revoked at any time). This also includes your consent to the transfer of certain personal data to third countries, including the USA, in accordance with Art. 49 (1) (a) GDPR. You can find more information about this. You can withdraw your consent at any time via the switch and via privacy at the bottom of the page.
You can listen to our WELT podcasts here
In order to display embedded content, your revocable consent to the transmission and processing of personal data is required, since the providers of the embedded content as third-party providers require this consent [In diesem Zusammenhang können auch Nutzungsprofile (u.a. auf Basis von Cookie-IDs) gebildet und angereichert werden, auch außerhalb des EWR]. By setting the switch to “on”, you agree to this (which can be revoked at any time). This also includes your consent to the transfer of certain personal data to third countries, including the USA, in accordance with Art. 49 (1) (a) GDPR. You can find more information about this. You can withdraw your consent at any time via the switch and via privacy at the bottom of the page.
“Everything on shares” is the daily stock exchange shot from the WELT business editorial team. Every morning from 5 a.m. with the financial journalists from WELT. For stock market experts and beginners. Subscribe to the podcast at Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.