Income from term deposits is already declining. Banks reduce the percentages, especially for longer terms. Customers must therefore now secure high interest rates in the long term.
Interest rates have not been as high as they are now for a long time, but it is unlikely that the joy of savings account investors will last much longer. According to comparison portal Durchblicker, the trend reversal has begun: over the past three months, interest rates with a three-year term have fallen by an average of 0.4 percent, and the current maximum is 3.4 percent (see chart below).
Reversal in ECB interest rates expected
The return also falls on money that is due and can be up to three percent. Banking expert Andreas Ederer from Durchblicker: “Most institutions offer lower interest rates for longer-term investments than for one-year deposits with a fixed term.” This reflects the expectation of interest rate cuts by the European Central Bank (ECB).
After the ECB has raised the policy rate ten times over the past two years and savings rates have also risen, an interest rate turnaround is now expected mid-year.
Expert: Retain for a longer period of time or opt for a new customer bonus
This makes it wise to tie up your money for longer, because customers will have to expect worse conditions in a year’s time. However, a longer term guarantees the current interest level. If your personal financial situation does not allow you to tie up your money in the long term, Andreas Ederer recommends taking advantage of new customer promotions. According to the Durchblicker comparison calculator, six out of twelve banks currently offer new customers bonus interest on call money.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
