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These banks pay high interest rates for call money and time deposits


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At the beginning of the year, Trade Republic announced that it wanted to pay two percent interest on uninvested deposit accounts in the future – and competitor Scalable Capital followed suit and even upped the ante with 2.3 percent – albeit with some additional costs and footnotes. A good move for customers and a challenge to many established banks that are still paying meager interest rates despite high single-digit inflation.

But the situation is improving and there are now a number of other banks that are again paying comparatively attractive interest rates for call money and fixed-term deposits. But are they really that attractive in view of the rising inflation rate and should one tie oneself to a longer contract (in the context of a fixed deposit)?




Why are interest rates attractive again?

On the one hand, this has something to do with the key interest rate, which has risen several times, and also with growing inflation. Although this is falling again after a record high of around ten percent last year, it is currently still 7.9 percent for the year as a whole. It is expected to remain in the high single digits, so savings left in the checking account “just like that” will depreciate significantly over time.




Are 2 to 3 percent interest a reason to breathe a sigh of relief?

Some banks are reacting to this with comparatively attractive interest rates. But the up to a good three percent (see below) cannot hide the fact that savings lose value in the face of inflation. Savers should therefore only have the famous nest egg in their call money account and, if necessary, collect higher income or profits elsewhere for other savings.

But always remember: return and risk go hand in hand – and a call money or fixed-term deposit account is therefore a comparatively safe matter. Nobody can predict with certainty how the stock markets will develop.




How much money should you have in the money market account?

That depends heavily on your own circumstances, lifestyle and marital status. As a rule of thumb, you should be able to get by with the money in the call money account for three to six months if, for example, you lose your job, your car goes on strike from one day to the next, or you have higher additional costs for other reasons. Anyone who has to finance a family or is self-employed has different requirements than a frugal single person.

But it is also important in this case that you can get your money at any time. Call money with the lower interest rate is therefore preferable to long-term fixed-term deposits. With fixed-term deposits, a distinction must be made as to whether this is generally fixed or whether you can get in early in an emergency – with a loss of interest.




Where are there still attractive interest rates on call money?

Trade Republic’s offer is already very attractive (as of March 2023) and certainly also includes a bit of a marketing budget, since the company’s two percent interest rate only pays off in a roundabout way, for example with money that you put in a deposit account and investment products there in the medium term redeployed. The offer from the competitor Scalable Capital is also interesting, although it requires a paid Prime Plus membership (but pays the high interest rate of up to 100,000 euros).

It is also interesting that the C24 bench, which belongs to the Check-24 Group, now pays two percent interest on overnight money on all checking accounts, including the fee-free account – and also pays commission for card payments. Furthermore, attractive call money rates for new customers pay the TF bank (2.4 percent), the Bank11 (2.3 percent), consor bank (2.1 percent), the Volkswagen Bank (two percent), the Audi Bank (two percent) as well as the ING (two percent). However, all of this only applies to a campaign period of four to six months, after which the much less attractive standard interest rate applies.

On the other hand, you can achieve permanent results with the Advanzia bank two percent that Lease Plan Banka leasing and fleet financier, at least 1.5 percent, and 1.31 percent in the Ikea group Ikano bench. The Austrian municipal loan still pays 1.25 percent. But you can get your money at any time within a few days if you need it.




And what about fixed-term deposit offers?

On the other hand, some fixed-term deposit offers are now more attractive, although the money here is of course tied up until the end of the term. With regard to the loss of purchasing power, this should be considered for longer terms and higher amounts. But you can, for example, invest part of the pension portion of a securities account.

For example, these are attractive Credit Agricole (CA Consumer Finance) from France with 2.25 percent for six months, 2.9 percent for one year and 3.3 percent for two years. After all, the French comes to 3.22 percent for two years Younited *(via Weltsparen), followed closely by Aareal Bank with 3.20 percent (also via Weltsparen). The offer of the Austrian is also attractive here municipal loan (a public financier that finances infrastructure projects, among other things), which advertises 2.5 percent for one year and 3 percent for two years, but only from a deposit of 10,000 euros.

A special feature concerns the payment service provider Klarna*. It offers different interest rates, depending on whether the transaction takes place in the classic way or via Klarna’s own app. For the fixed-term deposit account named Plus, which is managed exclusively via the app and includes a mandatory current account, there is slightly more interest, i.e. 2.81 percent for one year and 3.01 percent for two years.




What is it about the investment platforms?

In addition to the offers available directly from the banks, there are also savings platforms such as world savings*, interest rate pilot* or Deutsche Bank interest rate market. Some of these also offer attractive offers, but these fluctuate more frequently – especially with regard to the level of the negotiated interest rate. Here you can search specifically with your term and complete the transaction via the platform. However, you should consider which countries – or what level of security – you want to rely on.

It is recommended here to always rely on the best security or to be aware of the otherwise existing (small but existing) risks. It should also be noted here that users are currently reporting that the response times of these portals are increasing due to the new attractiveness of overnight and fixed-term deposits. So you should bring some patience with you and take into account that the activation and verification can also take some time.




Is the money really safe?

Basically, you should make sure that the bank with which you invest your call money or time deposit either belongs to the deposit protection fund of the German banks or is at least covered by a comparable fund of another European country (preferably EU/EEA countries). The respective countries are rated differently, with the rating agencies rating Germany and Austria as well as France, Luxembourg, the Netherlands and the Scandinavian countries as good.

Incidentally, it can also make sense to save via a portal such as Weltsparen or Deutsche Bank Zinsmarkt, since money invested abroad can then be processed through the platform if there are problems with the respective bank. Even if they are not liable in an emergency, they still have a strong interest in investors not being left out in the rain.




How does the tax treatment work?

Basically, you have to pay withholding tax on all interest. This is 25 percent, possibly plus church tax and, in very rare cases, a solidarity surcharge. The handling is regulated differently. While most banks do this for you right away, with other banks you have to do it yourself and state it in your tax return so that it is paid. However, you should not “forget” it, as the banks report the corresponding amounts to the German tax authorities. On the other hand, it is easier for you if the bank takes care of the taxation for you and provides you with a corresponding form at the end of the year.




What else do you have to consider when choosing a fixed-term deposit offer?

While some banks pay the interest on fixed-term deposits annually, others do so at the end of the term, which may be several years. This should be clarified in advance, as should the question of what will happen to the money due. In many cases, it is reinvested (at the applicable interest rate) if the investment is not terminated in good time.




Does regular account switching worsen the Schufa score?

Usually not with the classic money market and time deposit accounts, because these are managed exclusively on a credit basis. This can only become a problem with offers for which an additional credit card is opened, especially if the closure takes place shortly afterwards. In this respect, however, there is nothing wrong with having several accounts, nor is it problematic to engage in interest hopping and take new customer offers (as far as possible) with you.

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