Negative interest rates

Negative interest (also custody fees or penalty interest) means that you have to pay for your own money in your bank account – the bank takes money from you instead of paying interest.

How did it come about?

• In 2014, the ECB cut the deposit rate to −0.10%
• In 2019 to −0.50%
• Banks passed the costs on to customers
• Typical: −0.5% on balances over €50,000 or €100,000

What it meant: €100,000 in the account × −0.5% = €500/year in penalty interest. PLUS inflation (approx. 2%): real loss: €2,500/year. Savers lost money – in the account AND through loss of purchasing power.

End of negative interest: in July 2022, the ECB raised interest rates for the first time in 11 years. Since then, there has been positive interest on instant-access savings and fixed-term deposits again. Negative interest is history – for now.