Central Bank chief Christine Lagarde primarily wanted to curb the euphoria on the stock markets, but her words were also well received by savers: The European Central Bank will not lower interest rates for the time being, Christine Lagarde announced on Thursday. Banks can continue to borrow fresh money from the central bank for 4.5 percent. This is good news for anyone who has a savings or fixed-term deposit account.
The longer interest rates remain high, the better interest many banks pay on their savers’ deposits. If you still have money to invest, you should hurry up and secure the good conditions for daily money and fixed-term deposits. It is extremely likely that a first interest rate cut will take place soon. In addition, savings interest rates have already fallen slightly.
Since the beginning of the year, many financial market players have been speculating that the interest rate turnaround is imminent. They expect the central bank to cut interest rates again. Firstly, inflation has fallen significantly, which is why Lagarde raised interest rates. And secondly, the higher interest rate level is already making itself felt, as it has made loans that companies use to finance their future business more expensive. Less money from the bank means less growth for the economy. This slows down the economy.
A reduction in interest rates would be like a liberation for companies and the stock markets. Many market participants had already hoped for this for spring 2024. Stock prices have reacted correspondingly optimistically since the beginning of the year, and in return interest rates on loans and savings deposits fell slightly.
However, compared to the years of low interest rates, they are still high: customers can currently receive a market average fixed deposit interest rate of more than three percent for twelve months. At the beginning of January it was 3.08 percent, half a tenth of a percentage point more. Anyone who only wants to invest their money for six months will receive a market average interest rate of 2.72 percent. Anyone who makes an even shorter commitment will receive 2.26 percent for their three-month fixed-term deposit. The daily money currently yields 2.13 percent for this period.
However, these average data are not the end of the story, because the gaps between the offers from different banks are greater than the spread between the interest rates of individual terms: for one-year fixed-term deposits, for example, the interest rate range varies from 0.1 percent to 4.2 percent.
The only problem is: You can’t invest for a very long term, because the longer you lock up money, the lower the interest rates the banks currently want to pay for it. Ultimately, the institutions themselves assume that the interest rates they will receive for parking money will be lower. If they then paid customers more generous credits for a very long time, that would be bad business for them. With a ten-year commitment period, the fixed-term deposit interest rates are less than 4 percent, even with the best provider.
For ten-year fixed-term deposits, pbb Direkt currently pays 3.75 percent, while Varengold Bank pays 3.5 percent. Even with the best offers, there is no more four percent. However, this is still available if you set the money for five years. Then you can still get 4 percent from J
One-year fixed deposits currently yield even more: a maximum of 4.2 percent on the Weltsparen platform. Big Bank pays 4.0 percent and Crédit Agricole 3.9 percent. That means around 1,000 euros in interest income if you have 25,000 euros in savings. Anyone who can only spare 10,000 euros receives the same interest rates and earns around 400 euros in interest income.
The daily money is also interesting for savers: for 10,000 euros that are in the account, Trade Republic currently pays 4.0 percent annual interest, Norisbank pays 3.9 percent, and DKB pays 3.54 percent. The catch with daily money, however, is that it can change quickly. If the central banks actually announce a rate cut, the first banks will immediately reduce their deposit rates again. Experience has shown that they reduce their interest rate downwards much faster than they adjust their interest rates on their savings upwards.
This article first appeared in the business magazine “Capital”, which, like stern, is part of RTL Deutschland.
