Last Sunday, the president of the European Central Bank, Christine Lagarde, urged Dutch savers to consider changing banks when they are unhappy with it.
Changing banks is usually not necessary to get the most out of your money. Saving smartly can make your savings grow considerably. For this reason, Mónica Pina Alzugaray, general director of Raisin in Spain, shares five tips for savers.
Your direct debits are linked to an account, from which you carry out most of your transactions and where, for example, you receive your salary. If you are unhappy with your bank account, either due to high costs or unsatisfactory customer service, you can use the Bank Change Service. This is a service that automatically transfers all direct debits and payments to your new account.
This does not mean that no additional action should be taken. It is important to verify aspects such as the mortgage, investments that you may have linked to your bank account and download and save bank statements.
Do you find all this too complicated? You don’t even have to change banks.
The biggest problem facing Spanish savers is not so much being tied to a bank, but automatically opening a savings account with the same bank. The solution: You can easily open a savings account at another bank. Large banks usually require you to have a checking account with them, but many smaller banks offer higher interest rates and do not have this requirement.
Keep an amount needed for your charges in your checking account and move the rest to one or more savings accounts. This way, you can use your savings for different purposes and limit the amount available on which you receive little or no interest. You can usually apply for a savings account in a few minutes without having to go through the process of changing banks.
Banks can better plan the use of your savings if they know they can count on them for the long term. As a reward, you will receive a higher interest rate. As a general rule of thumb, the longer you lock up your money, the more interest you’ll receive.
What many Spaniards do not know is that they can also open a fixed-term deposit with short terms, even three or six months. You can deposit your emergency fund in a savings account without conditions, and on the rest of your savings you will receive a higher interest rate.
Furthermore, if you are one of the proactive savers who react quickly, you can benefit from new attractive offers on fixed-term deposits.
Many savers don’t want to lock up their money for long because they expect interest rates to rise.
To avoid this, you can open different deposits with different terms. The first part of your money will be available again, for example, after six months, allowing you to reinvest it. If interest rates have risen, you will be able to benefit from a higher remuneration and all your savings will start earning interest from day one.
Interest rates in many European countries are much higher than in Spain. Spanish banks do not see the need to offer higher interest rates. Savers’ fear of changing banks and a lack of international competition keep interest rates low. In other words, people will continue to park their money in underperforming accounts anyway.
It is important to know that the EU has established rules to ensure that saving is equally safe in all member countries. Deposits in all EU countries are protected by a deposit guarantee system that covers up to €100,000 per depositor and bank. Previously, it was difficult for savers to open an account with a foreign bank. However, several banks and savings platforms such as Raisin have greatly simplified this process, providing support and customer service in Spanish.
Interest rates abroad already reach 4% APR. This means that, for example, if you invest €50,000 in a term deposit for three years, you can receive more than €6,000 in interest. If you deposit the same amount in a savings account with immediate availability, you will receive around €1,000 at current interest rates. A small effort, but a huge difference. That is why it is important to consider the change.
