Even before taking inflation into account, Belgians now face negative returns on their savings due to very low interest rates and high banking costs. According to recent calculations by “L’Echo”, a Belgian daily, this has led to negative interest rates ranging between -0,02% and -1,60%.
The four largest banks of the country, BNP Paribas Fortis, Belfius, KBC and ING Belgium that together represent about 70% of the Belgian market for savings, offer historically low interest rates whilst maintaining very high banking costs, thus effectively subjecting their customers to negative interest rates.
L’Echo calculations are based on a simulation involving a client with 10,000 euros in a savings account (20,000 euros would allow for positive returns but such sums are not attainable for everyone), a current account and one credit card. For 10 of the 12 plans tested, interest rates are negative and even the two plans offering positive returns, do so only marginally with 0,04% and 0,05%. What’s more is that the premise used requires for the client to keep 10,000 euros on a savings account for a full year in order to benefit from the loyalty bonus, without which returns would even be more dismal.
Whereas it is still possible to find plans that don’t lose money, this would require one to change bank and accept a plan only available online with no services. Another option is for Belgians to go abroad with their money, forsaking the guarantees offered by the Belgian state.
Since last year BETTER FINANCE has been drawing attention to financial repression targeting savers and investors in Europe, increasingly generating negative real returns on savings. This situation is even more damaging for long-term and pension savings and therefore for retirement income.