In the current economic climate, as central bank interest rates and mortgage rates continue to decline, savings account rates are also moving downwards. However, there are still opportunities to find competitive savings rates, albeit not with the traditional major banks.
According to Christina Sahlberg from the comparison site Compricer, smaller players offering higher savings rates are not cutting their rates at the same pace as the larger banks. This means that it is still possible to secure rates of around 4% on variable savings accounts with no withdrawal restrictions.
For instance, Hoist Spar currently offers 4.09%, Morrow Bank offers 4%, and Multitude Bank offers 3.90%. While variable rates can fluctuate, starting with a good rate can quickly decrease with a variable account. Nevertheless, if you want the flexibility of accessing your funds at any time, opting for a variable savings rate is the way to go.
“Given the expectation of further rate decreases, it may be wise to consider locking in your funds on a fixed savings account, provided you are certain you won’t need access to them during the term,” advises Christina Sahlberg.
If you can afford to tie up your funds for a longer period before savings rates fall further, now might be the opportune time to do so. One institution currently offering high savings rates is JAK, a membership bank where joining costs around 135 kronor. By committing your funds for a 3-month period, you can earn a 4% interest rate. Froda and Serafim Finans also have savings rates exceeding 4% for a 3-month term.
For those looking to lock in their savings for a 6-month term, Multitude Bank offers a 3.90% interest rate. Other players like EP Bank, Saldo Bank, Aros Kapital, and Serafim Finans are not far behind.
While fixed-term savings accounts currently offer slightly lower rates, with 3- and 6-month terms aligning with variable accounts, the best rates for 2-3 year terms hover around 3.5%. If you commit your funds for 4-5 years, you could earn around 3% interest, according to Christina Sahlberg.
In comparison, major banks offer barely 1% interest on variable savings accounts with no withdrawal restrictions. For example, Handelsbanken offers 2.03% for a 6-month term, while Swedbank and SEB only provide 2%. Among the major players, Nordea stands out with a 2.25% interest rate for 6 months. However, this is still significantly lower than what Multitude Bank and several others offer, indicating that major banks do not value borrowing your funds as much. It may be worth considering alternative options.
Ensuring that your accounts are covered by the state deposit guarantee of up to 100,000 euros or 1,050,000 kronor is essential. This protection safeguards your funds up to the specified limit in the event of an institution’s insolvency.
Another crucial factor is ensuring that interest is regularly credited to your savings account, as this leads to compounding interest, generating additional funds over time. Having interest deposited into your account monthly is the optimal arrangement.
When comparing different savings accounts, it is important to consider the effective interest rate, which accounts for all costs such as administrative fees and setup fees. Ideally, you want to avoid any fees that can diminish your returns. The effective interest rate also indicates what the rate would be if interest were paid out annually.
Key considerations when comparing accounts:
– Is there a state deposit guarantee?
– Are there zero fees?
– The interest rate provided is annual – how is it paid out?
– Are there any restrictions on the account?
By taking these factors into account and comparing different savings options, you can make an informed decision on where to secure the best returns for your savings.