Steepest decrease in daily salaries observed in over a decade
**Headline:** Decline in Savings Account Interest Rates Continues in Europe, Long-Term Deposits Offer Better Returns
In recent months, the dynamics of savings account interest rates have intensified, with a sharp decline observed in June, marking the steepest drop in 13 years. This trend is particularly noticeable in Europe, including Germany, where savings account interest rates at regional credit institutions such as cooperative banks (Volks- and Raiffeisenbanks) and Sparkassen have further declined, averaging 0.43% and 0.39% respectively.
The recent decline in savings account interest rates is influenced by several factors. The European Central Bank (ECB) sets the benchmark interest rates for the euro area, and changes in these rates have a direct impact on savings account interest rates. The ECB held its main refinancing rate at 2.15% in July 2025, indicating a pause in rate cuts, which could stabilize savings rates at lower levels.
Another factor is inflation, which has reached the ECB's target of around 2%. With inflation at this level, there is less pressure for aggressive rate cuts, leading to stable or slightly lower savings account rates. Economic uncertainty, due to factors such as the strong euro and geopolitical trade tensions, also contributes to the decline in savings account rates.
Market competition among banks in Europe also plays a role. If other banks are offering lower rates, there may be pressure to reduce rates to remain competitive.
Comparing these trends with long-term fixed-term deposit interest rates reveals a counter-movement in long-term fixed-term deposits. While savings account rates have been declining, long-term fixed-term deposits might still offer relatively better returns, especially for investments with longer durations.
In Germany, similar factors apply, with the additional influence of domestic economic conditions and banking policies. German banks often adjust their interest rates based on ECB decisions and local market conditions. The rates for long-term fixed deposits in Germany might be slightly more competitive compared to savings accounts, reflecting the general trend across Europe.
As the ECB is expected to make an interest rate decision today, savers might want to consider securing their money in money market funds or long-term fixed-term deposits, which offer better returns compared to savings accounts. Comparing offers can help secure more attractive terms for both savings accounts and fixed-term deposits. Two German banks, Norisbank and Comdirect, offer savings account interest rates of 3% or more, while nationwide banks still offer significantly higher average savings account interest rates compared to regional banks. For fixed-term deposits, interest rates for five-year nationwide available fixed-term deposits have remained relatively stable since April, at 2.09%, while ten-year fixed-term deposits have risen by 0.1 percentage points over the same period, currently at 2.26%.
Sources: ntv.de and awi.
- In light of the decline in savings account interest rates in Europe and the potential for better returns from long-term fixed-term deposits, investors might be advised to consider personal-finance strategies, such as transferring funds into money market funds or securing long-term fixed-term deposits at competitive banks, like Norisbank or Comdirect, to optimize their investments and earnings under the community policy and employment policy.
- For individuals seeking higher employment-policy-related returns, exploring opportunities for investing in long-term fixed-term deposits could prove profitable, particularly in periods when European savings account interest rates are trending downwards, thus providing an alternative financial avenue with better returns within the given economic context.
