Banks benefit from customer inertia

Bank towers in Frankfurt

Most banks do not yet pay interest on call money. Your customers won’t run away either.

(Photo: dpa)

The European Central Bank (ECB) has raised interest rates several times. The interest on deposits, which is decisive for commercial banks, is 2.5 percent. And yet most banks in Germany do not pay their customers anything for short-term deposits. 0.0 percent on the call money, the same applies to the current account, where there is usually no interest anyway.

Many people consider this to be scandalous, especially given the high inflation rates. They get the impression that the banks are taking advantage of the current situation. In fact, banks are benefiting from the rise in interest rates, which are likely to continue to rise. Loans, construction financing, for example, have already become significantly more expensive.

So the banks are to blame? That would be too easy. In the end, they also benefit from the inertia of customers. The majority of customers just don’t shift money to get two or 2.3 percent interest per year on the call money. Because such offers can now be found on the market – usually for new customers.

So if you want higher interest rates, you get them. The competition on the German banking market ensures that. There are comparison and interest platforms that clearly show the different offers. In addition to the reduced demand, the competition also means that construction interest rates do not rise any further. On average, they were even higher than they are now.

In addition, many people are currently waiting. Interest rates on overnight and fixed-term deposits will probably continue to rise. For others, switching is currently not worthwhile. And some may resign in the face of inflation of almost nine percent.

Offer interest to existing customers as well

Anyone who can hardly put any money aside is unlikely to open a new money market account. According to a survey by the online bank ING, almost a third of consumers had no savings at the end of 2022.


Nevertheless, the banks, especially the Sparkasse, should not wait too long to offer their existing customers interest on call money. Many still have an overnight money account at their bank, which they just aren’t using at the moment given the long period of negative interest rates.

Because not only customers with larger assets will move at some point when interest rates rise a little. The money houses that react too late are likely to be in a bad position in the fight for deposits.

>> Read here: Banking renaissance

Ultimately, it’s also about reputation. If customers have the feeling that the banks are taking advantage of the interest rate situation for themselves, the reputation of the industry suffers. This applies in particular to the savings banks, which in the past have already initiated themselves as the “protective power of savers”.

More: Why are many banks and savings banks still not paying interest?