This article was last updated on May 17, 2023
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Interest Rates on Savings Increase at Rabobank, But Critics Say Rates Still Lagging Behind Mortgage Rates
Rabobank, one of the three major Dutch banks, has raised the interest on freely withdrawable savings accounts from 0.75 percent to 1 percent as of June 1. This follows a similar move the month prior, in which savings interest rates were also lifted. However, Rabobank’s rivals ING and ABN AMRO still offer an interest rate of 0.75 percent on savings for the time being. Meanwhile, smaller banks and foreign banks offer savings interest rates of up to 2.3 percent.
The European Central Bank Influence over Interest Rates
The decision to increase savings interest rates at Rabobank was the second in response to a rate rise at the European Central Bank (ECB). The ECB increased the main interest rate for the seventh time in a year at the start of May. This is in an effort to curb inflation in Europe. Rabobank and other banks are raising interest rates to reflect the ECB’s policies.
Criticisms of Dutch Banks’ Slow Interest Rate Increases for Savers
Although interest rates on savings have increased since November 2022, savers are still not seeing the same returns as borrowers. Some economists at De Nederlandsche Bank (DNB) have criticized banks for their slow adoption of increased savings interest rates compared to mortgage rates. Minister of Finance Sigrid Kaag has also raised concerns over the matter and has called on banks to explain why increases for savers have been slow.
Comparing Savings and Mortgage Rates in the Netherlands
At ING, the 0.75 percent rate applies to amounts up to 10,000 euros. However, the interest rates on savings accounts are rising more slowly than mortgage rates, allowing banks to charge borrowers more while paying savers less. Nonetheless, savers can still increase their returns by shopping around for higher interest rates with smaller and foreign banks or investing in accounts with better returns.
With the interest rate on savings increasing at Rabobank for the second time in a month, savers may soon start to see better returns on their savings accounts. However, critics argue that banks still lag behind when it comes to raising interest rates for savings compared to mortgage rates. Savers are advised to shop around for higher interest rates with smaller banks and foreign banks or to invest in higher-yield accounts.