Negative interest rate on savings from €5,000

The threshold for negative interest rates on savings is likely to be lowered further this year. Some banks would even consider lowering this limit to €5,000. This is according to a study by comparison site Verivox among around 1,300 financial institutions in Germany. At the moment, that limit is still €100,000 at many banks.

The comparison site reports that last year there were at least 155 banks that set the bar for negative interest rates at €50,000 or lower. Some banks would even consider a limit of €5,000. In doing so, they try to discourage saving. In March last year streak Geotrendlines already about this development. Banks don't want any more savings and encourage customers to withdraw them.

According to Verivox, 423 of all the financial institutions surveyed in Germany already charge negative interest rates to consumers. This was 245 more than one year previously. This means that negative interest rates are becoming the norm in a country where people traditionally save a lot. "Negative interest rates have become a mass phenomenon and have already reached the average saver"Oliver Maier of the German comparison site explained.

Negative interest rate limit further down

In 2021, ninety financial institutions in Germany further tightened their conditions for negative interest rates. In most cases, it means lowering the threshold above which savers have to pay interest. At -0.5%, the most common rate is the same as the rate charged by the ECB for banks' excess reserves. The central bank introduced negative interest rates in 2014 to discourage saving and boost consumption. Banks often don't know what to do with the savings and therefore park them at the central bank, which costs money.

Banks have long been reluctant to pass on negative interest rates. They feared negative publicity and that it might cost customers. But practice has shown that many savers simply stay put, even with negative interest rates. They find alternatives such as investing too risky or too complicated. They accept negative interest rates. As a result, negative interest rates have slowly but surely become the norm in large parts of Europe.

Even more negative interest rates

Yet there are also banks that go a step further and push the boundaries. According to data from Verivox, nineteen financial institutions decided to further raise negative interest rates last year, from -0.55% to even -1%. In this way, these banks try to deter new savers. The banks already have more savings than they can use.

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