More and more credit institutions are charging penal interest rates

More and more credit institutions are charging penal interest rates

Negative interest rates at the start of the new year: according to data from the internet portal verivox, at least 16 institutions, mainly volksbanken and savings banks, have introduced negative interest rates for investments by private customers or increased existing penalty interest rates in the first weeks of 2020.

"The force of the negative interest rate wave has once again increased significantly this year," said oliver maier, managing director of verivox finanzvergleich gmbh.

Maier pointed out that the introduction will initially apply only to new customers. If a bank wants to charge penalty interest to existing customers, it must agree this individually with the customers concerned.

The federal ministry of finance has a critical eye on negative interest rates for bank customers. On the basis of the current legal situation, it is at least fraught with high legal risks for banks to demand negative interest rates from customers within existing contracts, a spokeswoman announced on saturday in response to a query. Previously, the "passauer neue presse" had reported on the results of a corresponding audit by the ministry.

So-called "negative interest clauses", which were introduced into existing contracts by means of a change in the general terms and conditions, were therefore only permitted with the express consent of the customer. The financial supervisory authority bafin had "sufficient supervisory instruments with which any systematic violations of this legal situation could be prevented," the ministry said. The federal government continues to monitor the situation, particularly with regard to actual market developments.

According to verivox data, for which price statements published on the internet by 800 banks and savings banks were evaluated, 38 institutions are currently charging negative interest rates to private customers – usually for credit balances on the call money account. In addition, there were seven financial houses where the daily allowance account costs fees. As a result, there are in fact negative interest rates, even if they are not shown as such.

As a rule, it hits rich private customers. According to verivox, however, five institutions currently charge less than 100 percent for overnight deposits.000 euro negative interest – two of them completely waived a free amount.

By charging punitive interest rates, banks are trying to pass on to customers the costs they themselves incur as a result of the negative interest rates set by the european central bank (ECB). If banks park money with the central bank, they currently have to pay minus 0.5 percent interest. In this way, the watchdogs want to create incentives for lending in order to stimulate the economy.

From mid-december 2018 to mid-december 2019, german financial institutions had to pay a total of about 2.4 billion euros in interest on money stashed at the custodians, according to data from the deutsche bundesbank obtained by the deutsche press agency. Previously, "wirtschaftswoche" had reported on the figures.

CSU finance politician hans michelbach assumes that bank customers will face even more punitive interest rates in the future. "The spiral will continue to turn," michelbach told the "passauer neue presse" (saturday). This would undermine people’s trust in the social market economy. "People say, ‘I can’t have to pay interest on my hard-earned money at the bank myself."Michelbach proposes an innovation fund set up by the state with a guaranteed interest rate of two percent as a safe investment alternative.

Commercial banks now have to pay 0.5 percent interest if they park excess funds with the european central bank (ECB). Even though there are now exemptions for certain sums, this remains a billion-dollar burden for the industry. More and more banks are now passing on the costs and charging their customers negative interest rates. According to the bundesbank, there were 1783 banks and savings banks in germany last year.