The ECB is currently raising interest rates sharply in order to suppress massive inflation. But what does the turnaround in interest rates mean in concrete terms for savers and borrowers? A recent study shows that interest rates have risen sharply – both for savings deposits and for loans.

Millions of savers have been waiting for this for a long time: interest rates are finally picking up again. This can be seen, for example, in the daily allowance. Savers can currently collect up to 0.55 percent for daily available money. This was determined by the comparison platform Verivox.

But the interest rate arrow is not only pointing upwards for call money. Banks are currently advertising savings deposits with particularly attractive conditions for new customers. As a result, customers can earn up to two percent interest on a one-year fixed deposit. And for 2-year fixed-term deposits, German banks pay up to 2.3 percent today. That is more than four times as much as at the beginning of the second quarter.

Still, savers need to be aware that, on balance, they are losing money. In view of the current inflation of almost eight percent, an interest rate of two percent, for example, only mitigates the loss in value of money – it cannot compensate for it.

Sample calculation: Bank customer A. deposits EUR 10,000 in a fixed-term deposit account for one year. For this he gets two percent interest – that’s 200 euros. Inflation in Germany was 7.9 percent in August. If this rate remains stable, A.’s savings will lose 790 euros in value within a year. The bottom line is that A. loses 590 euros.

In the past six months, installment loans have increased by around 29 percent on average, as determined by Verivox. The rise in interest rates is even clearer in the low-cost market segment, where the rise in prices has reached a hefty 59 percent.

The detailed results show that the average interest rates for all loan offers obtained via the brokerage platform rose from 5.14 percent in March to 6.62 percent in August. That means an increase of exactly 28.79 percent. Consumers who need an installment loan have to shoulder correspondingly higher costs.

In the case of the cheapest loans, the interest rate rose from 2.99 to 4.75 percent (plus 58.86 percent) in the period mentioned.

The study comes up with more bad news for consumers: Despite the interest rate hikes that have already taken place, installment loans are likely to become even more expensive. At least most of the banks surveyed are expecting this development. Eight of the twelve financial institutions surveyed expect interest rates for installment loans to continue to rise.

The outlined development can also be seen in real estate financing. Interest rates have tripled in the last few months.

Many banks are now setting up higher hurdles when it comes to accessing credit. The money houses want to protect themselves from the risks of over-indebted customers. Almost half of the banks tightened the guidelines for granting installment loans in the past quarter. Three other banks are planning such steps in the current quarter.

The study shows that interest rates are likely to continue to rise, and the ECB’s current interest rate hike also points in this direction. Then the consumers pay more, who postpone a necessary installment loan. If you know that you will soon need money, you should not put off the interest comparison that is due.

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