Interest rates in Europe have been zero since 2016 and practically zero (0.05%) since 2014. In addition, the marginal credit facility for banks has been negative since 2014, that is, when they have excess cash, the ECB charges them for it. And this has implied that the deposits hardly give interest to the citizens.
However, there are always occasions when banks offer something of interest to attract customers. This was very typical in the 90s and 2000s, due to the large number of existing banking entities, but this possibility has been reduced over time. Nevertheless there are still some interesting deposits that we have found on the market.
The deposits of “the new”
Just as when ING arrived in Spain it tried to revolutionize banking by eliminating commissions, operating online and paying a lot for its orange account, now there are some new players who try to attract customers with attractive deposits.
On the one hand we have Orange Bank, which offers the 0.5% APR up to 40,000 euros in your savings account. In a promotional way and during the first month it gives 1%, but only for the first 20,000 euros.
It is also interesting what Renault Bank offers. On the one hand, an account paid at 0.5% APR. But if we have money available and we are willing to depositing it for 24 months the rate rises to 0.6%. The remunerated account has no limit and the deposit is for balances of less than one million euros.
myinvestor offers a 1% APR during the first year but only for the first 15,000 euros of balance. After this year, profitability falls to 0.1%, so you have to be aware to move the money to places with better conditions.
Deposits in traditional banks
Nevertheless traditional banking also offers some interesting deposits. Two stand out, one less known and the other better known, but they have been operating in our country for many years.
On the one hand, there is Banco Finantia, dedicated to clients with large balances but which has been operating in Spain for twenty years. They offer deposits from 0.5% APR (12 months) to 0.85% APR (60 months). Hit it? It is for balances greater than 50,000 euros.
And then there is Bankinter, which offers a payroll account with a 5% APR, but it has many conditions: first, they only pay the first 5,000 euros; second, you have to direct a payroll, receipts and make payments; and third, the second year profitability drops to 2%.
Are they worth it?
Actually all these returns are low but higher than the official interest rates of the euro zone. Therefore the answer should be yes, these deposits that are around 0.5% are worth it. But the reality is that inflation is much higher than these returns (3.3% in August) and therefore having the money deposited is losing purchasing power.
The normal thing in this situation is for the ECB to raise rates to prevent inflation from continuing to rise and deposits from becoming more attractive, but it does not look like it will happen. The ECB has been looking for some inflation to reduce debts for years and now that it has achieved it, it is not going to stop it.
Therefore, deposits right now are not interesting. You should only have the money strictly necessary in accounts and deposits and the rest is much better to invest. Or if there is an extreme aversion to risk, in that case we have given a good overview of what is available in the market at the moment.