65% leave savings banks in bank account – And get bad interest
At the end of July this year, an article in SDV was read that very many households miss out on large interest income because they do not actively choose to invest their money at high interest rates but are content with the major banks’ savings rate.
Despite the fact that there are players in the loan market that offer significantly higher interest rates and with a government deposit guarantee, the major banks retain their position to have the savers’ greatest confidence. About 65% leave their money in a savings account with one of the larger banks. A savings account that provides very poor returns.
Those who deposit 100,000 can earn up to USD 2000 per year by choosing the right loan institution to deposit their money with.
Interest rates that differ only by one percentage point
The fact that many people miss out on large interest income was also something that (freelance writer) raised in her editorial column in the same newspaper July 29th. In the column, Jerst asks what makes so many people choose to turn a blind eye to the large revenue they are missing. The first reason she mentions is security. Many people have a (false) view that the major banks can be trusted more than the other players in the market. When the economy is troubled in many parts of Europe, one turns to what feels safe in the otherwise unstable economic market. A little paradoxically, therefore, more people turn to the big banks when there is a financial crisis that is largely based on precisely these.
The second point that Jerst points out is the feeling that it makes no difference. With interest rates that differ only by one percentage point, it is not considered worth moving the money. This is a mistaken notion, which was proved not least in the above example. Earning 2000 USD in a year just by moving the money is good earnings. In addition, this is only in the first year. The better interest rate has been for several years to come.
A third factor that Jerst believes is crucial is that the major banks retain their customers by offering lower mortgage rates if they also have a savings capital with them.
Nevertheless, savings are increasing
Today, the savings rate is very low no matter where you place your money. This is because the lending rate is unusually low. With a low lending rate and thus very little interest on invested capital, the result should be that more and more people do not want to save their money on savings account. But that’s just the opposite.
Before the financial crisis struck (2007), USD 700 billion was invested in savings accounts. Today it is close to 1250 billion. As the situation is today, the Swede would like to invest his money in savings accounts with low interest rates. In addition, 65% of the money is invested in the savings accounts that have the worst interest rates on the market. This is neither logical nor economical. But the financial world is not always logical …