How to stop your bank exploiting you

Are you also getting no interest on your bank accounts, this is how to fix it

This article is a website version of our weekly FREE Best Ideas Newsletter sent on 30.05.2023. Sign up here to get it in your inbox every Tuesday.


Like you I've been watching central banks worldwide substantially increasing interest rates this year. So far, I have been patiently waited for my bank to increase my deposit rates.

BUT nearly nothing has happened!

I'm sure this is something you've also realised!


Why banks have been VERY slow to increase rates

I looked around for explanations why banks have been so slow to increase interest rates.

The main reasons I came up with are:

  • Banks have been tightening lending standards (lending less because of stricter requirements)
  • Property lending demand is falling substantially
  • Corporate mergers and acquisitions have come to a virtual halt


All these mean banks have no need for our deposits, so they just keep the price low – pay a low interest rate.

This also means if we keep our money there, they earn a nice profit even if they just leave money overnight at the central bank.


European banks example

For example, here in Germany by bank pays me 0.75% per year on a deposit account where I keep two years of living expenses.

If you look at the interest rate page of the European Central Bank you can see that banks can place money with them and earn 3.25%

That gives them a 2.5% profit for doing nothing and taking no risk.


Taking good care of my cash

Last week I realised I've been neglecting the cash in all my accounts, brokerage accounts included.

Why I have left it so long is beyond me. Probably because interest rates were so low or virtually non-existent for so long, I never looked at that part of my portfolio.

Anyway, this week I decided to start looking for some low-risk money market funds that offer a half decent interest rate.

And I suggest you start doing the same, if you have not already!


Earn €4,500 by doing nothing

Just think about it, if you have about €200,000 lying around in your accounts and you can earn 3% on it compared to the 0.75%, I was earning at my bank.

That'll give you a profit of €4,500 for doing nothing, just moving your money to a higher yielding account.


Your, helping you get the highest return analyst


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