First fixed-term deposit offers with interest rates above inflation signal hope for savers in Germany

26.10.2023, 04:34

Frankfurt/Main. After a long dry spell, savers in Germany are benefiting from increased interest rates and the recent fall in inflation. The first top providers pay interest on fixed-term deposits with a term of one year, which at 4.75 percent is above the inflation rate of 4.5 percent in September, according to an analysis by the comparison portal Verivox. “The return of positive real interest rates is an important turning point for savers,” said Oliver Maier, Managing Director of Verivox Finanzvergleich GmbH.

However, on average, the real interest rate – i.e. the interest after deducting inflation – for fixed-term deposits is still at minus 1.18 percent (reference date: October 20th). The loss of value due to inflation is therefore greater than the capital gain due to interest.

According to Verivox, the era of rising interest rates may soon be coming to an end. “There are currently many indications that fixed-term deposit interest rates will soon have reached their peak,” said Maier.

No further ECB interest rate hikes expected for the time being

In the fight against high inflation, the European Central Bank (ECB) has raised interest rates in the euro area ten times in a row since July 2022. Higher interest rates make loans more expensive, which can slow down demand and counteract high inflation rates. Economists expect the monetary authorities to leave interest rates unchanged at their meeting this Thursday. Inflation has eased and concerns about the economy are growing.

According to information, many investors have hardly benefited from rising interest rates when it comes to overnight money. At 27 percent of the 747 banks and savings banks evaluated by Verivox with at least one daily money offer, savers receive a maximum of 0.25 percent interest. At some institutions they continue to receive nothing. “The ECB’s deposit interest rate is higher than ever before in the history of the eurozone,” said Maier. “But many regional banks in particular are still not passing on the high interest rates to their customers.”

From the perspective of Sparkasse President Helmut Schleweis, overnight money is more of a “money storage” than an investment. In contrast to fixed-term deposits, savers can access daily money at any time. Banks and savings banks would therefore find it difficult to calculate with these funds, Schleweis recently said. “You can see that in the interest rate offered.”

The consumer portal Biallo.de also offers an overview of interest on savings investments.