It is the tenth interest rate hike in a row and a historic one: the European Central Bank increased the key interest rate again on Thursday by 0.25 percentage points. This is good news for savers because they can now hope for even more lucrative interest offers from banks. The general level of interest rates is a decisive factor in how well financial institutions pay interest on secure interest investments such as call money and fixed-term deposits. What savers should know now.

Never before in the history of the euro has the central bank raised key interest rates so much in such a short period of time. Until the middle of last year, the key interest rate was still at zero, and the deposit interest rate was even minus 0.5 percent. Accordingly, the banks did not offer their customers any savings interest or even charged negative interest rates.

With the current interest rate move, the key interest rate at which banks can borrow money from the central bank (main refinancing interest rate) will rise to 4.5 percent, the highest level in 22 years. The deposit interest rate, which is also important and at which banks can store excess money with the central bank, is now at 4 percent, its highest level since the introduction of the euro in 1999.

The reason for the key interest rate increases is to combat inflation. If inflation rates continue to be so high, the ECB would actually have to increase interest rates even further. The argument against this is that higher interest rates are strangling economic growth and the economy in the euro area is already weakening. Most experts therefore expect that the current step will reach the interest rate peak. ECB boss Christine Lagarde did not want to commit to this on Thursday. However, some of their colleagues on the Central Bank Council made it clear that they are not seeking any further interest rate increases in the next few months.

Savers, for their part, can still hope for higher interest rates, as many banks only adjust their offers after a slight delay when the key interest rate is decided. “After the current interest rate step, the interest rates for overnight money and fixed-term deposits are likely to increase somewhat initially,” writes the financial portal Biallo. Historical data showed that even after the ECB pauses interest rates, savings rates could continue to rise for several weeks and months.

When it comes to overnight money, the offers with the highest German deposit protection currently range up to 4 percent interest per year. However, you should always pay attention to the exact conditions when comparing daily money offers. The top interest rate often only applies to new customers and only for a limited time. Bank11 and C24 are only offering their top interest rate of 4 percent on overnight money until the end of the year. IKB guarantees 4 percent for three months, Scalable Capital for four months. After the guarantee period, the interest rate drops to 1 or 2 percent for many providers. If you don’t want to constantly move your savings back and forth, you should look at who also promises good conditions in the long term.

An alternative to daily money is a fixed-term deposit. Here you put your money in an account for a predetermined period of time such as one, two or five years. The interest rate is guaranteed for the entire term, but you only get your money back at the end. So you should be pretty sure that you don’t need it in the meantime. The top offers for multi-year fixed-term deposits are currently also 4 percent or just above. They could go up a bit in the coming weeks, says Biallo. “If you want to put your money into fixed-term deposits for the long term, you can now take your time looking for a good provider.”

The best way to get an overview is to compare interest rates online. FMH, for example, offers comprehensive yet clear comparison calculators. Stiftung Warentest also offers interest rate comparisons for daily money and fixed-term deposits paired with independent information. You should always find out exactly which conditions apply before you sign up with the bank.