June 8, 2023

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Savings interest at the four largest Dutch banks has risen (slightly) again

Savings interest at the four largest Dutch banks has risen (slightly) again

Customers of the four largest banks can now count on a savings interest of 0.75 percent. announced on Monday ND Volksbank raises the interest rate on social networking services to three-quarters of a percent.

This trend has clearly reversed: in the past year, big savers have been paying negative interest at the four largest banks (ING, Rabobank, ABN Amro and SNS) for their savings. However, banks take very small steps with regard to their interest on savings. Certainly compared to the ECB deposit rate (the interest rate for banks to deposit money in the central bank). After seven increases in less than a year, that has now risen to 3.25 percent.

Banks also set upper limits on the amount of savings that customers can benefit from the interest rate of 0.75 per cent. In ING, this limit is now relatively low. For example, ING customers with more than ten thousand euros receive only 0.65 percent interest on this money. Many banks, such as SNS and RegioBank, are now also offering a lower interest rate of 0.25 percent on top of a ton of savings.

The competition is bolder. The digital bank Bunq already gives 2.01 percent interest on savings and Centraal Beheer 1.05 percent. Abroad, for example, France’s Bank Renault gives 2.15 percent interest to a freely withdrawable savings account.

Read also: The European Central Bank opts for a limited rate increase: 0.25 percentage points

Saving is still not really profitable

Because of inflation, saving is still not really profitable. According to CBS Inflation (calculated at a quick estimate) was 5.2 percent in April. Inflation is particularly noticeable at supermarket checkouts: people even paid 13 percent more for the “food, drink and tobacco” category than in the previous year.

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It is attractive for banks to be a little quick to raise interest rates on savings, in contrast to mortgage rates. Banks earn on the difference between the interest you pay on savings, for example, and the interest you receive on money lent – for example on mortgages or business loans. This difference is also known as the “interest margin”. It has traditionally been one of the main sources of profit for banks.

However, banks take very small steps with regard to their interest on savings

In recent years, this model has come under pressure due to low interest rates in financial markets and central banks. Banks wanted to pass negative interest rates on to customers as little as possible.

Research conducted by DNB shows this Especially in the second half of 2022, bank profits from interest rates increased. The annual figures also expressed an expectation that the interest margin would rise further in 2023. Since interest rates on mortgages have been fixed for years, there is some delay in earnings from the interest margin.

fix interest

Overall, 0.75 percent for saving is still very low from a historical perspective. In 2008, for example, the average interest on savings was roughly 3 percent. After that, this percentage fell sharply, averaging 0.05% interest rate in 2021.

Someone who finds investing too risky, but at the same time current savings interest rates too small, can choose to tie up money for a longer period of time. This is also known as a “savings deposit”. Those whose money has been tied up with ING for three years, for example, currently receive interest at 1.7 percent. At ABN Amro this is 2.1%.

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