The era of earning 4% without risk is coming to an end: guide to squeezing out paid accounts and deposits

Achieving a 4% return with almost no risk has been relatively easy over the last year and a half, but that time is coming to an end. The foreseeable interest rate cuts that the European Central Bank (ECB) will begin to apply starting next week will reduce the supply and interest paid by banks on deposits and interest-bearing accounts, which are the favorite products to obtain a extra money with accumulated savings. But before they carry out the cuts, there are still options to squeeze out the most conservative savings.

In the showcase of paid accounts, you can obtain interest of between 2% and 5%. In general, the large Spanish banks have remained behind when it comes to remunerating deposits (in relation to other European markets), given that they have excess liquidity due to the savings accumulated by households in recent years and do not need to launch offers to capture more. But smaller entities have taken advantage of this non-appearance to attract clients. It is an easy way to generate extra money with savings and for banks it is the cheapest way to finance their operations.

The highest interest is paid by Ibercaja, with 5.09% per year, as long as the client directs the payroll. Of course, the maximum paid balance is 10,000 euros (a lower limit than other offers). If the client maintains this balance throughout the year, they can earn a maximum of 509 euros gross. Likewise, Bankinter offers 5% the first year for a maximum of 10,000 euros, with the requirement of direct debiting a payroll, three receipts per quarter and making at least three card payments every three months. By meeting these conditions, the client can obtain up to 500 euros in one year.

At a slightly lower level, Trade Republic rewards 4% of the money in the account. The German neobroker establishes a limit of 50,000 euros, so the client could earn a maximum of 2,000 euros in one year. N26 has just launched a promotion for which it will also reward 4% savings for customers who have contracted the metal subscription (the most expensive, with a price of 16.9 euros per month). The advantage that the neobank offers is that it does not set a maximum limit on the balance to be paid, so all the money deposited in the account will benefit.

Where the bank tightens its offers the most is in the interest range of between 3% and 2% per year. Renault Bank offers 2.89% and also does not establish a limit on the remunerated balance (for example, if the client maintains 10,000 euros, the client would receive 289 euros in one year). EVO, the digital bank of the Bankinter group, pays 2.85% for a maximum of 30,000 euros, Banca March 2.53% over 50,000 euros (as long as the payroll or pension is domiciled), MyInvestor pays 2.5% over 70,000 euros (maintaining that figure the client would earn 1,750 euros in a year), WiZink 2.3% with no maximum balance limit and Openbank 2.27% over 100,000 euros (allows you to earn 2,270 euros). Sabadell pays 2% on 20,000 euros, which means that it allows you to earn a maximum of 400 euros gross in one year.

Given the variety of offers, when choosing which remuneration offer is best, three aspects must be taken into account: the savings available, the APR paid by the bank and the maximum balance that is remunerated. In general, banks that offer a higher APR pay on a smaller amount of money. And vice versa, those that offer a lower APR pay more balance. In that sense, the client has to take into account the volume of his money to get the most out of it.

Deposits deflate in longer terms

Regarding deposits, the offer is similar and the interests are concentrated between 3% and 4%. The drawback in these products is that the money invested is blocked and cannot be used until the agreed period expires, whether three, six or twelve months. The advantage they offer over accounts is that they have no limits on the maximum amount of money paid and, if there are limits, they are much higher, so the client can find options so that all their savings benefit from the remuneration.

It must be taken into account that the APR refers to annual interest, but deposits that pay the highest interest only do so in three months. That is, the final remuneration that the client will receive in a three-month deposit is a quarter of what he would obtain if he maintained the balance for twelve months. To give an example, for a balance of 10,000 euros, in a one-year deposit that pays 4%, at the end of the period the client would receive 400 euros gross. With that same balance, at the same interest rate, but with a duration of three months, the client would earn about 100 euros.

Since interest rates are higher now than they will be in a few months, shorter durations offer the best returns. Cetelem pays 4% and the Italian bank BFF 3.8%. A little further away, EBN offers 3.1%, and MyInvestor and SelfBank 3%. If the duration is extended to six months, the profitability falls half a point: Cetelem pays 3.5%, EBN 3.1%, BFF 3.55%, MyInvestor 3% and SelfBank 3.1%. And at 12 months the offer is anchored at around 3%: Cetelem offers 3.2%, Pibank 3.14%, EBN and Banca March 3.1% and BFF, WiZink, MyInvestor and SelfBank 3% .

And if you want to take out a deposit for one year, the offer focuses exclusively on returns of 3%: Cetelem pays 3.2%, Pibank 3.14%, EBN and Banca March 3.1% and BFF, WiZink , MyInvestor and SelfBank 3%.

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