The savings account exchange rate changes, yes, but… – Finance

At the beginning of 2023, passbook rates are increasing in most banks. This increase is good news for depositors. Although… Beware of fake offers!

No more grotesque rates of 0.11%! After years of stagnation and almost zero returns, the passbook rate is finally moving. A number of smaller banks (such as Santander, NIBC, Aion, Keytrade and MeDirect) jumped on the bandwagon, raising interest rates by 1% or more in the fall. Other players in the sector such as Argenta, Triodos, Axa, Crelan and Deutsche Bank have followed suit. At the end of the year, Belfius, KBC-CBC and ING were next in line to fall, with rates currently rising to 0.60%.

No more grotesque rates of 0.11%! After years of stagnation and almost zero returns, the passbook rate is finally moving. A number of smaller banks (such as Santander, NIBC, Aion, Keytrade and MeDirect) jumped on the bandwagon, raising interest rates by 1% or more in the fall. Other players in the sector such as Argenta, Triodos, Axa, Crelan and Deutsche Bank have followed suit. At the end of the year, Belfius, KBC-CBC and ING were next in line to fall, with rates currently rising to 0.60%. As for BNP Paribas Fortis, the last of the big banks to come out of the woods, it has decided to end the base rate of 0.11% that it has applied for several years, like almost the entire sector. From February 1, customers of the leading Belgian banking group, as well as its banks Fintro and Hello! , will see the total interest rate on their regulated savings accounts drop to 0.25%. In addition, the bank has announced the arrival of a new Savings Plus Account that will yield 1.25%. Good news, thank you! Moreover, behind these attractive-looking offers is a marketing mechanism that is not always suitable for savers. The overall annual rate of rising passbooks, this is good news. However, current growth remains limited given market conditions. With rates below 1.6% at Santander (for amounts between €125,000 and €200,000) and under 1% at the big banks (excluding the new BNPP Fortis and ING accounts), we are not yet at the level of the ECB’s deposit rate. , the rate at which commercial banks deposit with them and repay liquidity reserves raised to 2% at the end of 2022 to fight inflation. This is because, as Gregory Quilm, an investment expert who specializes in financial education, explains, “banks today are no longer penalized with negative rates when they deposit cash with the ECB, so they can make a small margin by doing nothing. A small margin of a few tens of millions of euros per year, or more for some financial institutions.” In fact, there is no such thing as a free lunch for eurozone banks, which today make an easy living by replacing their customers’ deposits with the ECB risk-free! When gross returns are attractive , this is often because the loyalty bonus is much higher than the base rate. An example at Belfius, where a new account called Belfius Fidelity has a base rate of 0.15% and a loyalty bonus of 0.65%, i.e. 0.80% gross return. New ING Savings At ING where the account formula also features a loyalty bonus of 0.65% on gross return that rises to one percent over all periods (with a base rate of 0.35%).As for the new BNPP Fortis account, it has a base rate of 0.50% and a base rate of 0.75 % loyalty bonus. Remember, only 1.25% interest for customers who keep their money in the account for a year. The purpose of this generous loyalty bonus is really to “encourage depositors’ inactivity and therefore b is to ensure good stability of deposits for banks,” recalls Yannick Grécourt, EY’s partner in charge of the banking sector. With equal salary, it is better to take the one that shows the best base rate. If the last amount is given for each day in the account, the loyalty bonus is given only for money kept in the account for at least one year. It is also payable on the first day of the quarter following 12 consecutive months. For all payments made at the beginning of the year, you will only see the color of the loyalty bonus on April 1… 2024! Banks also play with timing to be generous without giving too much. It can take several weeks between the announcement of a rate hike and the rate hike taking effect. For example, the interest rate hike in BNPP Fortis will be effective only from February 1, while it was announced on January 6. For the protector, this period does not change much. “More or less euros a year is not what keeps him from sleeping, explains Yannick Grécourt. What is important for him is first of all to put money aside and to feel that he is doing what he needs to do.” It’s another thing for the bank. The effect is greater. With a deposit reserve of around €66 billion, some estimate that BNPP Fortis thus managed to save around €15 million by choosing to raise its base rate by just 0.15%. As explained above, invest part of the margin in campaigns to raise new capital to easily make a profit with the ECB, especially if it raises its rates further. “Furthermore, adds Yannick Grécourt, we have not yet seen extremely aggressive bids from outsiders as we have seen in the past. In addition to the inactivity of depositors, this does not encourage you to go faster.” In order to benefit from more favorable income, banks also set conditions in terms of minimum and maximum amount. While the 1.60% gross rate on the Vision Max account with Santander is currently the best on the market, it is only available for a minimum deposit of €125,000. The situation is even worse with Deutsche Bank’s new Silver account. Its 1% return (0.40% base rate + 0.60% loyalty bonus) is reserved for deposits over €250,000… In contrast, the new BNPP Fortis account balance will be limited to €100,000. Available with ING’s Tempo account at 1.40%, but with a maximum payment of €500 per month. In extreme cases, Aion Bank applies a monthly subscription of 19 euros to take advantage of the favorable conditions (1.5%) of the Extended account. Obviously, “you have to take the time to compare the offers and terms,” ​​says Gregory Quilmin, because they can be very different from one account to another. Let’s not forget the limit on the loyalty bonus that forces you to keep your cash in the same place for 12 months. ECB It is surprising to learn that banks that deposit cash in A 30% withholding tax applies, but interest is paid monthly, but the highest paying account is currently Santander’s Vision Plus (1.40%) with no strings attached, apart from the need to cash out within 12 months (otherwise the loyalty bonus is lost entirely). Passbook In order to differentiate themselves in the competition, several banks open new accounts at the beginning of the year. What is special about these new savings formulas? BNP Pari bas Fortis income difference with a classic account, which can reach 1% (see the table “Rate difference in the book of major banks”). So, who is right, banks like KBC who raised their discount rate to 0.60% or BNPP Fortis who raised their rate to just 0.25% but launched a new product, Plus account with 1.25% salary? “The idea behind these new accounts is simple, analyzes Yannick Grécourt. It is to get fresh money, that is, to collect new deposits that come into the current account from somewhere else. For example, in another bank. On the side, it is necessary to manage the cannibalization of the deposits of existing depositors. Forget not that existing savings have been placed through loans or long-term investments at interest rates from the past, c “That is, low. This is called duration, i.e. two years on average. That’s why some have launched new savings formulas.” Selectively attracting savers, starting with new money-makers who might take the ECB’s “payment” direction. Making the effort to open a new account should really put some savers off. Especially going through a branch or calling a call center if you don’t want to, for example, you’ll have to wait until March to be able to open a new BNP Fortis Plus account through the app. Of course, there’s one last element that could distort the impression of a more attractive return in early 2023: inflation. And so your savings lose value. Real return (interest rate minus inflation) is not really the same.So 0.50% of the global rate (Belfius, Crelan…) or 0.60% of KBC-CBC and Argenta expected this year 5 % should be compared with the rate of inflation. Therefore, based on these new estimates of cost of living increase, the loss of purchasing power would be about 4.50%. It is less catastrophic than 2022, when inflation hovers around 10% and the savings account interest rate is a legal minimum of 0.11%. But given the previous years’ inflation rate (2.44% in 2021 and 0.74% in 2020), this paltry 0.11% was ultimately “better” than current rates.

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