The interest on savings is rising again. For a long time, the Dutch received nothing extra if they placed their savings with a bank. In some cases, negative interest even required money to be invested. But what about now? Is it useful to store the old sock again?
Which banks have announced to raise interest rates?
ING Bank, ABN Amro and Rabobank have announced that the interest on savings will increase as of 1 December. Private savers then receive 0.25 percent interest on savings from ING up to ten thousand euros. Above that, 0.15 percent applies up to one million euros and above that 0 percent. At ABN and Rabobank, the variable interest rate for savers will rise to 0.25 percent.
De Volksbank, which includes banks such as SNS, ASN and Regiobank, has not yet announced an interest rate increase. Earlier, several smaller banks also announced interest rate hikes.
Is this the beginning and now more rises follow?
“That is what we expect,” says Amanda Bulthuis, money & insurance expert at Geld.nl. “Inflation is still high and the European Central Bank will make another interest rate decision on Thursday. Until recently, banks had to pay interest to deposit their money at the ECB. Now that interest rates are rising, they earn money from it, so that they can offer their customers interest again. In addition, the ECB’s refinancing rate is also rising. That is the interest at which banks can borrow from the ECB. If that rate rises, it will become more attractive for banks to attract savings instead of borrowing from the ECB. They also have a slightly higher interest on the savings.”
Is it worth saving again?
Until recently, savings yielded almost nothing and often even cost money. Especially if you still had a mandatory checking account in addition to your savings account and had to pay wealth tax. And then inflation also makes your savings worth less. “But now we are dealing with really big changes,” says Bulthuis. “The interest rate was very low. It is remarkable that it is now increasing at such a rapid pace. We also notice that banks are competing with each other. Interest rates are not high enough to compensate for the current high inflation, but at least it will pay you more now than before.”
Tip: check the costs of your payment package. You can then easily calculate whether saving costs or yields you money. Or choose to save with a bank where you do not have to close an extra checking account. The tax-free allowance for wealth tax in 2022 is EUR 50,650 per person. For tax partners this is double: 101,300 euros.
What is deposit savings and why do I get more interest there?
Saving on deposit means you lock up your money for a certain period of time. You cannot access it during that period, but in return you will receive a higher interest rate than on your regular savings account. The interest on a savings account is variable and with a deposit savings account you already know on day one what amount you will receive at the end of the period.
Bulthuis: ,,If you lock up your money for one year, you now receive 2.5 percent interest, for example. That is considerably higher than on your savings account. This is because banks have security. They know that they have access to money over a longer period of time. They use that money, for example, to invest or to issue mortgages. This is not the case with a savings account, because you can withdraw your money at any time.”
NB: it is not wise to put all your savings in a deposit account. Make sure you sufficient buffer to be able to pay (unexpected) bills.
Should I not put my money in a foreign savings account?
Interest in storing savings abroad is growing. This is not only noticed by Bulthuis van Geld.nl, where the number of applications has risen from ‘a few hundred’ to ‘thousands’, but also the mediation platform Raisin. “From a competitive perspective, we cannot share concrete figures, but we can say that the number of Dutch customers we have has more than doubled in the past 365 days,” says press officer Jasper Berkhout. “The highest interest can be obtained abroad. Even now that interest rates in the Netherlands are rising, interest rates at foreign banks are about 0.5 to 1 percentage point higher.”
Berkhout: ,,Dutch banks often lag behind because there is less demand for loans and because the supply of savings in the Netherlands is generally already quite high. Foreign competition does ensure that Dutch banks also take action. That is of course positive. On foreign deposit accounts, you even get interest rates of 2 to 3 percent, depending on how long you lock it in.”
Savings account
With €18,200 (average savings amount according to CBS)
– Yield after 1 year
At 0.25%: € 45.50
At 0.65%: € 118.30
Difference: €72.80
savings deposit
With €18,200 (average savings amount according to CBS)
At 1.65%: €300 after 1 year and €1,502 after 5 years
At 3.00%: €546 after 1 year and €2,730 after 5 years
Difference: €246 after 1 year and €1,229 after 5 years
“People are sometimes concerned about safety,” says Bulthuis. “Of course they think of Icesave, but fortunately that no longer applies due to the deposit guarantee system. As a result, you are insured with all banks in the European Union up to 100,000 euros if a bank goes bankrupt.” Berkhout adds: ,,Be careful with the currency of the account. You then have to deal with any exchange rate fluctuations. A weak currency often offers higher interest rates, but the question is whether you want to take that risk.”
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