This penalty interest should be paid by new and existing customers

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Jul 04, 2021 – 10:41 am watch

Direct Bank charges 0.5 percent penalty interest

Direct Bank ING is strengthening its momentum with negative interest: in the future, both new and existing customers will pay a custodial fee of 0.5 percent per annum for balances over 50,000 euros, as announced by the institute in Frankfurt. Had it.

Credit balances on current and overnight accounts are “penalized”

Reason for negative interest rates: Commercial banks currently charge 0.5 percent interest on deposits of excess money with the European Central Bank (ECB). More and more financial institutions are bearing the costs. Recently many institutions had reduced the discounts for the customers. For example, from June 21, Postbank is paying penalty interest from 25,000 euros.

“So far we have been able to substantially offset the costs caused by falling interest margins and the negative deposit interest rate of the ECB with our existing product portfolio,” said CEO Nick Xu. However, deposits in ING Germany continued to grow, as many competitors have already introduced negative interest rates. “After careful consideration, we have decided to pass on the negative interest rate from the ECB to our clients for balances in excess of EUR 50,000, currently in the form of a custodial fee of 0.5 percent.”

For new customers, the institute has halved the tax exemption applicable from November 2020. The new terms will be applicable from November 1, 2021 for all new current and overnight money accounts opened from July 6.

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ING notifies customers of negative interest rates and seeks approval

In addition, from July the bank wants to write off about 750,000 of its 9 million existing customers who have more than 50,000 euros in current or overnight accounts and ask them to agree to the introduction of custodial fees. The aim is not to lose any customers, a spokesperson stressed. The Bank is confident that it will be able to avoid possible termination of accounts in negotiations.

Over the years, Direct Bank used to lure the name ING-Diba with relatively high savings rates. But when interest rates are low, money is spent in deposits. This is why the institution, which has operated only under the name of Dutch parent company ING since November 2018, is trying to attract more House Bank customers. In other words: Ideally, customers not only deposit money, but also generate commission income through mortgage loans, consumer loans or securities savings. (dpa/aj)