More and more banks in Germany are charging penalty interest

Now VR Bank Westmünsterland is also charging penalty interest for its savers. The Volksbank Raiffeisenbank Fürstenfeldbruck had previously decided to introduce negative interest rates. The basis of this development is the interest rates of the European Central Bank, which has been demanding negative interest rates from commercial banks for short-term investments since 2014.

In the future, negative interest rates will affect more and more normal customers of banks. Private customers are now being asked to go to the nearest credit institute, namely VR-Bank Westmünsterland - from just one euro. In the new price notice, the bank shows a negative interest rate of -0.5 percent when new overnight money is invested by customers. Negative interest is also due for the current account, but there is still an individually determined exemption for which no negative interest is due.

The Volksbank Raiffeisenbank in Fürstenfeldbruck has been charging a euro from one euro since October Negative interest of -0.5 percent on the overnight money of their customers. This was the first time that private savers were also affected by the penalty interest. These have already been introduced by other banks, but exemptions of around 100,000 euros still applied here.

Other banks had already introduced them, but only from allowances of 100,000 euros or more.

The basis for this is the negative interest rates that the European Central Bank has been paying for the Commercial banks be collected. The deposit rate was cut by the central bank in September to -0.5 percent, from -0.4 percent previously. This was the signal that the negative interest rate phase will probably continue in the future.

Up until now, particularly wealthy private customers have been affected by the penalty interest. However, it is now also affecting the small savers. Experts assume that even more banks will charge negative interest rates in the coming weeks and months without corresponding allowances. Banks will find it difficult not to keep up with the trend in penalty rates, especially as customers begin to relocate their deposits. This creates a spiral that will ultimately affect most private savers.

This was also the reason given by the Volksbank Raiffeisenbank in Fürstenfeldbruck for their decision. The bank stated that lately customers who are actually customers of the competition, but who have already exhausted their allowance there, have been approaching the bank more and more often. According to the experts, this trend will continue to increase the more banks charge negative interest rates. In Germany, there will soon be hardly any private saver who is not affected by the banks' penalty interest rates.