Dhe majority of Germans are increasingly reaching their financial limits due to high inflation. “We predict that due to the significant price increase, up to 60% of German households will have to use all of their disposable income – or more – monthly for pure living expenses,” said the chairman of Sparkasse, Helmut Schleweis WELT AM SONNTAG.
“This part of the population is then simply no longer able to save.” With 40 million homes across the country, this would affect 24 million homes. A year ago, according to the Sparkasse Wealth Barometer, only 15% were unable to save money. The Sparkassen Group itself has 50 million customers.
A decrease in clientele can also be observed within the Volks- und Raiffeisenbanken. “High inflation robs consumers of their purchasing power, which reduces their ability to save,” said Andreas Martin, chairman of the Association of German Volksbanken and Raiffeisenbanken (BVR).
However, many customers still take advantage of the fact that they can redeem the additional savings accumulated during the Corona period due to a lack of consumption options. “The peak value of the savings rate was around 16% in 2020, for 2022 we expect a return to the pre-crisis level of 11%,” says Martin.
The 772 Volks- und Raiffeisenbanken are also seeing the opposite effect on their 30 million customers. “Those who can tend to save more because of the uncertainty surrounding the war in Ukraine,” says Martin. At the end of June, cooperative banks recorded an increase in customer deposits of €27 billion or 3.3% to €838 billion compared to June 2021.
Representatives of savings banks expect the situation to deteriorate significantly in autumn and winter, especially for people with low and middle incomes. According to the German Association of Savings and Transfer Banks (DSGV), the central association of 363 savings banks, the tense situation is already evident when the current account is overdrawn.
The association announced that those who use the overdraft facility to fill short-term bottlenecks are “now exploiting the reach much more”. This development clearly began in March 2022, shortly after Russia’s invasion of Ukraine and the associated price spikes.
There are also differences between the available customers: despite the tense situation, little has changed in the total number of available users. The share of savings banks has been stable at 15% for years, announced the DSGV. Recently, it has even decreased slightly.
Savings banks attribute this to people becoming more cautious and holding their money for months to come. Those who spend less do not slip so easily into the red.
Overdraft Interest Limiting Requests
Not everyone has that choice. This is why there are initial demands within the ranks of the ruling parties to limit the amount of overdraft interest allowed, which currently averages nearly ten percent. “Basically, we Greens consider it necessary to cap overdraft interest by law,” said green politician Stefan Schmidt.
Some banks demanded increasing interest rates of twelve percent and more, while at the same time even more people could depend on the overdraft facility in the future due to high inflation. The interest cap aims to protect people against escalating costs and to ensure that people with low and irregular incomes also benefit from overdraft facilities, the member of the Bundestag said.
His suggestion: The Federal Ministry of Finance could determine an interest rate higher than a reference interest rate. “I can imagine that an interest rate six to seven percent above the benchmark interest rate would meet those criteria and be appropriate,” Schmidt said.
When asked, the Federal Ministry for Consumer Protection of Steffi Lemke (Greens) refers to the European Union. The Consumer Credit Directive is currently being revised in Brussels. According to preliminary plans, Member States should ensure that consumers are not burdened with disproportionately high interest rates.
The Department of Consumer Protection supports this approach, a spokeswoman for Lemke said. For the concrete implementation, we want to wait for the completion of the EU legislative process.
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