Status: 06.09.2023, 13:43 p.m.
By: Lisa Mayerhofer
After the turnaround in interest rates, the banks are once again catching customers and increasing the interest rates on savings in overnight or fixed-term deposit accounts. But what is the better choice for savers?
Munich – After the long period of zero interest rates, saving is worthwhile again. Banks are once again offering customers hefty interest rates on their savings. If you change now, you can get more attractive offers for overnight or fixed-term deposits as a new customer at many banks. But what is most worthwhile for savers? An overview.
Why are interest rates rising again?
After years of zero interest rate policy, the European Central Bank (ECB) has now raised key interest rates nine times in a row since July 2022 in the fight against inflation in the euro area. Higher interest rates make loans more expensive. This can slow down demand and counteract high inflation rates. It will therefore be more expensive for borrowers, while savers can look forward to rising interest rates.
According to the Bundesbank, however, banks and savings banks are sometimes taking more time than in the past to pass on interest. It is true that interest rates had risen comparatively slowly in the past after key interest rate hikes. "Since September 2022, however, interest rate forwarding has been even more sluggish than in the past," said the June issue of the Bundesbank's Monthly Report.
After the turnaround in interest rates, the banks are once again catching customers and raising interest rates on savings. (Symbolic image) © Fleig/ imago
What is the difference between current, overnight and fixed-term deposit accounts?
The current account is the account for daily payment transactions. This is where the salary, pension or Bafög are received. Rent and other expenses for personal needs are deducted from this. "Without the current account, practically nothing works," says Annabel Oelmann, board member of the consumer advice center Bremen. But it's just not suitable for saving. The temptation to touch the reserves available at any time for unplanned purchases is too great. On top of that, there are no attractive interest rates on the balance.
Therefore, to save money, the overnight or fixed-term deposit account is the better choice. With both you cannot participate in normal payment transactions. They correspond exclusively with your own current account.
In a fixed-term deposit account, you basically invest savings for a certain period of time - about one, two or three years - and cannot dispose of the money during this time. At the end of the term, the invested money flows back with interest.
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In contrast, money invested in a call money account is available at any time. By bank transfer, the savings can be retrieved from the call money account back to the current account, from there, for example, to settle the unforeseen bill. This flexibility is lost compared to fixed-term deposits with a lower interest rate.
How have interest rates on overnight money and fixed-term deposits developed?
According to data from the comparison portal Verivox, the average interest rate of nationwide overnight money offers is currently 1.39 percent (cut-off date: 4 August) – a year earlier it was 0.05 percent. There are less interest rates at savings banks with an average of 0.41 percent and at local Volks- und Raiffeisenbanken with 0.39 percent.
If you invest your money firmly, you will receive an average of 3.15 percent interest on fixed-term deposits with a two-year term at nationwide active banks, according to Verivox. In the case of savings banks (2.25 percent) and local cooperative banks (2.34 percent), the average interest rates are also lower here. "With the offers available nationwide, savers benefit from fiercer competition among market participants," explains Verivox Managing Director Oliver Maier.
Which is better – fixed-term deposit or overnight money?
It depends: If you invest in a fixed-term deposit account, you can secure high interest rates for years to come. Because: The financial expert Horst Biallo sees an end to the race for the highest interest rate in overnight money. Therefore, he recommends savers to compare different fixed-term deposit offers, the expert told Handelsblatt.
For example, Pbb direkt, a subsidiary of Deutsche Pfandbriefbank, and Bausparkasse Mainz would offer interest rates of 4.25 and 4.2 percent for ten years. "If you don't need a certain amount for ten years, you get very high interest rates here, which will soon probably be above inflation," Biallo told Handelsblatt. However, savers must bear in mind that it will be difficult for them to get their money during this period – and will lose interest if they stop early.
So if you need regular access to the money, you are probably still better off with a call money account – but then you have to change often for good interest rates. Because here, too, according to the expert portal Finanztip, four percent interest is offered at the top, but usually only for a short time. "If you always want to have the best interest rate on overnight money, you have to stay on the ball and change every few months," Biallo told Handelsblatt. However, this is now very fast thanks to the video identification procedure.
With material from dpa