Savings Accounts With High Interest In Europe

Key Takeaways

Flexible & Fixed-Term saving accounts are two types of saving accounts that offer higher interest rates than normal bank accounts.
Flexible savings accounts are good for savings like the emergency fund because the money is always available.
Fixed-term savings accounts are good for saving for a specific goal, such as a property.
Profits from interest income are taxed at 25% capital gains tax for both options.
To ensure the safety of your savings consider the deposit insurance system, the bank’s country rating, and the potential risks associated with higher interest rates.

Introduction: Flexible & Fixed-term savings account

Are you tired of earning low-interest rates on your savings? Are you looking for a way to grow your money without taking on too much risk? If so, you may be interested in learning about two types of savings accounts offered by banks in Germany: Tagesgeld and Festgeld.

Flexible savings account: Tagesgeld accounts, also known as “overnight money” accounts, offer customers the flexibility to deposit and withdraw money on a daily basis and earn a higher interest rate compared to traditional bank accounts.
Fixed-term savings account: Festgeld accounts, on the other hand, are accounts that are set up for a specific amount of time. During that time the money in the account is locked and cannot be withdrawn.

In this blog post, we will be discussing the benefits and drawbacks of these two types of accounts. We also explain our flexible and fixed-term savings account PerFinEx Calculator. With these, you can calculate your needs and easily open the best available account for you.

Flexible Savings Accounts With High Interest

A Tagesgeld account is a type of savings account offered by banks in Germany and Europe. This account allows customers to transfer money into the account and earn interest on their deposits. The account is open for an indefinite amount of time, which means that customers have the flexibility to withdraw or transfer funds from the account on a daily basis. This flexibility is one of the reasons why Tagesgeld accounts are sometimes called “overnight money” accounts in Germany.

In comparison to traditional bank accounts, flexible savings accounts typically offer higher interest rates for customers. This makes them a good option for individuals who want to earn a higher return on their savings without committing their money for a fixed period of time. Flexible savings accounts are a popular choice among consumers in Germany because they offer a convenient and flexible way to manage their savings.

Fixed-Term Savings Accounts With High Interest

Fixed-term savings accounts are a type of savings account offered by banks in Germany and Europe. These accounts are set up for a specific amount of time, typically between one year and 10 years. During that time period, the money in the account is locked and cannot be withdrawn or deposited. This means that customers must carefully consider the length of time they choose when opening a fixed-term savings account.

While it may be tempting to lock your money away for a more extended period of time in order to earn a higher interest rate, it is important to keep in mind that you will not have access to that money until the end of the term. This can be a disadvantage if you have an unexpected financial emergency and need to access your savings.

However, fixed-term interest accounts can be a good option if you are saving money for a specific goal. For example, if you want to buy real estate in a few years, or use money in a few years to pay off a loan faster, you can use it to invest it safely. You will then get more interest than with a flexible savings account.

How Are the Profits Taxed in Germany?

In Germany, the tax situation for Tagesgeld and Festgeld accounts is straightforward. There is a flat 25% capital gains tax on any earnings above 1.000€ (in 2023). However, it is important to note that you must inform your bank of any earnings in order to receive the tax benefits. If you do not, your bank will pay the capital gains tax directly to the Finanzamt (German tax office).

For non-German banks within the EU, the tax situation may be more complicated as capital gains tax rates can vary from country to country. However, the EU has harmonized its taxation policies to a certain extent. Thus, investors who save with non-German banks within the EU may still be eligible for tax benefits when they file their tax declarations. It is important to carefully consider the tax implications of your savings options and consult with a tax professional if you have questions.

Is Your Money Safe With the accounts of the calculator?

When it comes to the safety of your savings, there are two important factors to consider. In theory, your money is completely safe because the EU has a deposit insurance system in place. This means that all of your savings up to 100.000€ are insured by the national government.

However, in reality, if a bank goes bankrupt it can take some time for the government to pay out the insurance and return your money. This was the case with the Icelandic bank Kaupthing, which went bust during the financial crisis in 2008-2009. Customers had to wait months to get their money back.

Therefore, it is important to be aware that higher interest rates may come with higher risks. If you want to avoid risk, you will likely have to accept a lower interest rate. It is also worth considering the rating of the bank’s country by independent agencies like Standard & Poor’s, as this can give you an idea of the safety of the bank.

Conclusion: Which Savings Account Is Best For You?

In conclusion, flexible saving accounts and fixed-term saving accounts are useful for different types of savings. Tagesgeld accounts offer flexibility and higher interest rates, making them a good option for an emergency fund. Festgeld accounts, on the other hand, are locked for a specific period of time and offer higher interest rates in exchange for this lack of flexibility.

Both types of accounts are insured by the national government up to 100.000€, but it is important to carefully evaluate the risks and rewards of different savings options and make a decision that aligns with your financial goals and risk tolerance.