Savers in the Netherlands have had a rough few years. First came coronavirus, then skyrocketing inflation rates. However, while inflation is certainly an issue, there’s a silver lining to be found: interest rates on savings are still rising in 2023.
That means your savings will actually have the chance to earn money while they’re waiting to be used.
The only question is this: how can you ensure that you enjoy the best interest rates?
Enter Raisin. Raisin is a savings broker that gives you access to savings accounts of banks across the EU — without you having to leave your home, deal with language barriers in banks, or remember login information for 10 different banks.
The result? You can deposit your savings in banks across the Dutch border with the best savings interest rates, giving your money a fighting chance against inflation.
Why are deposit rates rising again?
This is a bit complex, so strap yourselves in folks — and adopt the economic confidence of a frat boy after a good few biertjes.
Ok, so: the European Central Bank (ECB) is the central bank for the euro and sets interest rates. The goal of the ECB (and, for that matter, any central bank) is to keep prices stable.
By increasing interest rates, banks aim to help with bringing down demand for all kinds of products and resources as worldwide supply chains are disrupted, causing the inflation we are experiencing right now.
The ECB increased its rates in February of 2023, and further increases are expected.
The ECB has been influencing interest rates in broadly two ways in the past years.
- One way has been by influencing longer-term instruments (where rates come about in the capital markets) using quantitative easing (QE).
Put simply, QE is when the ECB pumps money into the capital markets, causing a higher supply of money… and what happens when the supply of any currency goes up? The price goes down.
In the real-life economy, this means the price of borrowing or lending money, goes down. When the ECB started slowing the QE program down, interest rates on longer-term products, among which fixed-term deposits, started rising.
- Another way is by influencing shorter-term interest rates by adjusting its key interest rates.
The interest rates set by the ECB affect banks directly because these are the rates against which they can borrow money from the ECB and, more importantly, against which banks can place money with the ECB overnight.
Until July of 2022, the interest rate for banks to deposit excess savings (i.e. the part they don’t lend out) was a negative 0.5% p.a. — meaning the banks had to pay the ECB to keep your savings.
This pushed down interest rates on freely withdrawable savings as far as the full -0.5% p.a. Since July, this rate has been pulled back up to 0.75% p.a., causing further movements upwards in short-term interest rates across Europe.
The effects of these policy reversals have had a much more powerful effect on other countries in the EU than the Netherlands.
Why is this then good news for Dutch savers?
According to Raisin, the best freely withdrawable savings (no fixed time period) interest rates that you will find at the major Dutch banks stand at 0.01%.
READ MORE | The best banks in the Netherlands for internationals
And if we look at other EU banks? Drum roll, alsjeblieft — 2,15% at Renault Bank. Yes, that is indeed a 2,15 times higher interest rate.
For example: Let’s say you have €100,000 stashed away under a mattress. If you deposited that in a major Dutch bank with a rate of 0.01%, you would earn a pitiful €10 over 12 months.
In a bank with an interest rate of 1.75%, that number transforms to €1,750. Meanwhile, your money is safer than under the mattress, fully guaranteed, and accessible when you need it.
You may be wondering why Dutch savings interest rates are not responding the same way to ECB actions as elsewhere in the EU. This comes down to the Dutch savings market, which — to say the least — is about as concentrated as the sugar level in a stroopwafel.
READ MORE | This online savings platform is the solution to the Netherlands’ stingy savings rates
The Dutch Central Bank (DNB) attributes this to an ageing Dutch population that tends to spend less money and a large service sector which needs less investment than the manufacturing industry.
In fact, Dutch savers are breaking record after record with the amount of money they are saving.
This means that there isn’t actually much demand for savings in the Netherlands, or at least much less than the Dutch population supplies.
However, you will find that demand from banks abroad. There are plenty of reasons for more demand and subsequently higher interest rates on savings.
For example, banks in other EU countries might face fierce national competition, which forces them to offer higher rates, the supply of deposits in their home markets could be relatively lower, or the local supervisory authority has a specific approach that requires that a certain (larger) share of the total capital of banks is made up of deposits.
But let’s say you don’t want to benefit from the single EU market and really want to keep your money in the Netherlands.
Well, your only hope is that with international banks offering such high deposit rates, the Dutch banks will be pressured to offer better interest rates to their customers in the future – we wouldn’t hold our breath, though.
While your savings may be off backpacking in a (for example) French or Estonian bank account, you can take a relaxing breath and know that, while your savings are off getting cultured, they won’t disappear on you.
Anything up to €100,000 per account holder per bank (or the equivalent amount in local currency) will be protected by national, statutory deposit guarantee schemes in accordance with EU guidelines — no matter what happens to the bank where your money is lodged.
Time for action! Saving abroad makes your wallet smile
While you’re waiting for Dutch banks to catch up and realise they’d be lost without you, you may as well benefit from placing your heart and your savings in the muscled arms of international banks.
While there is nothing wrong with hoping that Dutch savings rates rise, they will never return to the levels of old – it’s simple, the demographic and economic characteristics of the Netherlands no longer allow for this.
Moreover, we’re living in the here and now — and what matters in the here and now is muscles — by that, we mean the current interest rates.
At the moment, international banks offer much better saving opportunities through their higher interest rates.
The Swedish payment service provider Klarna was the first bank to break the 1%-barrier for one-year fixed-term deposits in June and offers a stunning 2.84% today.
Dutch savers can also earn 2.84% per year on a two-year fixed-term deposit with the Swedish Nordax Bank. Meanwhile, Dutch banks don’t bother coming close to these rates.
In fact, Raisin provides access to banks with interest rates as high as a whopping 3.60% per year for a three-year fixed-term deposit with the Italian Banca Progetto.
Need we say more?
Ok, I’m in, how can I get started?
It’s easy: simply sign up with Raisin and open one single online account for free (yes, free) savings accounts with banks across the EU — and top interest rates — that suit you.
You’re not required to walk into each individual bank in person, that’s what Raisin is for. You can open these savings accounts via their platform. You can also take comfort in the fact that your savings are safe.
Will you be moving your savings abroad? Tell us your thoughts in the comments below!
But inflation is at 13%. You’d be a fool to leave your money in the bank. It’s better to rather make your money work for you. Buy some stocks or an ETF.