Customers of various banks in Germany are used to penalty interest from a certain savings amount. At ING, the so-called negative interest rates will soon no longer exist. With this, the direct bank is setting an example – and putting its competitors under pressure.
The direct bank ING (formerly: ING DiBa) has significantly increased the allowance for account deposits. From next July, negative interest rates should no longer be an issue for almost 100 percent of customers, explains ING.
What are negative interest rates?
Negative interest rates make it uncomfortable for savers. The amount, officially known as the custody fee, is due when bank customers have a sum of money in their account above a certain amount. Until recently, the ING had charged negative interest from a sum of 50,000 euros. But in the future, the custody fee limit for the balance on current and daily accounts should be EUR 500,000.
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Increased interest rate makes it possible
In addition to ING, a number of other banks have also introduced negative interest rates in recent years. This was in response to the change in the European Central Bank’s (ECB) main refinancing rate. This is the interest rate at which banks can regularly borrow money from the national banks and the ECB. The key interest rate fell as a result of the financial crisis, which in turn meant higher (among other things administrative) costs for the banks, which were passed on to the customers accordingly. But now the key interest rate is rising again.
“Our promise stands: As soon as the ECB lifts the negative interest rates, we will generally no longer charge custody fees for private customers.” This explains the ING in the course of its innovations.
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Other big banks are likely to follow
In fact, ING is the first major, but not the very first bank in Germany to react to the optimistic development on the capital markets. Several smaller banks are said to have already abolished negative interest rates in the past few weeks and thus passed on the positive market expectations to their customers. The comparison portal Verivox observed this at Sparkasse Aschaffenburg-Alzenau, Oldenburgische Landesbank, Volksbank Stendal and PSD Bank Kiel. The fact that ING is now taking the step may also initiate a movement among the large financial institutions.