400 banks and savings banks charge negative interest rates – sometimes even for small balances

The number of banks in Germany that charge their customers penalty interest has continued to grow. At the end of September, 392 credit institutions reported negative interest rates for their private customers, as the comparison portal Verivox announced on Thursday. That was 214 more than at the beginning of the year; In the past three months alone, the number rose by 43 banks and savings banks.

In addition, more and more financial institutions are tightening their existing negative interest regulations by pushing the interest even deeper into the red or reducing tax exemptions so that negative interest is due even with lower balances, as Verivox further explained. The portal evaluated the conditions of around 1,300 banks posted on the Internet. (The complete Verivox list.)

In its own research, the consumer portal recently found 490 banks and savings banks that charge negative interest on private assets. At least 30 financial institutions collect the so-called custody fee even from the first euro, reported Biallo. In addition to new customers, existing customers are also increasingly affected.

The tax exemptions decrease

According to Verivox, the limit of 100,000 euros or more on the account – for which until now mostly exemptions applied – has fallen at many institutes: According to the evaluation, at least 135 banks now charge negative interest from a total balance of 50,000 euros or less. In some cases, negative interest would be due from as little as 5000 or 10,000 euros on the account.

According to Verivox, most institutes charge a custody fee of 0.5 percent. The penalty interest that banks pay on part of their excess deposits that they park at the European Central Bank (ECB) is just as high. 13 banks went beyond this with their negative interest rates and charged their customers’ credit with 0.55 to 1.0 percent penalty interest, as the evaluation showed.

VZBV considers negative interest to be inadmissible

The negative interest mainly affects new customers. If a bank wants to demand a custody fee from existing customers, it must agree this individually with the parties concerned. However, the Federation of German Consumer Organizations (vzbv) considers negative interest rates on current and overnight accounts of consumers to be fundamentally inadmissible – regardless of whether they are new or existing customers.

Since June 2014 commercial banks in the euro area have to pay interest when they park money with the ECB. This deposit rate – known in technical jargon as the deposit facility – is currently minus 0.5 percent. For some time now, the central bank has been granting allowances for certain sums in order to relieve the institutions. Quite a few financial institutions pass on the costs of negative interest to their customers.

Accordingly, negative interest rates are not always shown as such: According to Verivox, a total of 21 banks and savings banks charge a fee for the overnight money account, which is usually kept free of charge. “From the customer’s perspective, this actually results in negative interest rates,” explained the portal. The money in the account becomes less, even if the bank shows the interest rate as 0.00 or 0.01 percent. Eleven of these 21 banks also charged nominally negative interest rates.

“We are still seeing great dynamism in negative interest rates, but while new banks introduced custody fees almost every day in the first half of the year, this development has slowed somewhat at the moment,” said Oliver Maier, Managing Director of Verivox Finanzvergleich GmbH. An end to the negative interest rate trend is not in sight.

Verivox criticized the fact that by no means all banks publish negative interest rates transparently and freely accessible on their website. So there is an “unreported number”. In fact, “significantly more” than 392 banks are likely to charge negative interest rates.