Savings rates are going up again. What should you do?

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It is likely you have seen in the news that interest rates have gone up the past year. As a result, the interest you get on your savings is going up too. In this blog, we explain how this happens.

How come that the interest on my savings is going up?

Up to 2022, the global interest rates were historically low due to the COVID-19 pandemic and the measures taken by central banks to support the economy.

However, since the summer of 2022, central banks have been raising step-by-step interest rates in an effort to tackle the high inflation levels, which trickles down in the interest rates for savings accounts that have gone up too as a result. Also, other interest rates (such as the interest rate you pay on a new mortgage) have gone up significantly.

It is also worth noting that competition among banks and other financial institutions can also play a role in determining interest rates for savings accounts. To attract and retain customers, some banks increase the interest rates on savings accounts.

So the increase in the interest rates you get on your savings may come from a combination of the overall interest rate environment along with competition among the financial institutions.

Overview of interest rates in the Netherlands

For a good overview of interest rates you get on savings accounts with banks in the Netherlands, check out this website.

Please note that these interest rates are updated on a frequent basis, so make sure to check for the latest numbers when you are considering a (new) savings account for your money.

We have included the interest rates for simple savings accounts only. In case you want to commit your savings for a longer period of time, say 5 years or longer, you could get a higher interest rate. This is called a savings deposit. Via this website you can also check out the different rates for savings deposits that various banks in the Netherlands offer.

When opening a savings account, it is also important to consider the (monthly) service charges that the bank charges you. These costs can impact your returns significantly over the longer-term.

Given the rising interest rates, how does that impact my strategy to build long-term wealth?

Rising interest rates can have a negative impact on the overall economy, that could result in a so-called ‘bear market’ and a decrease of the overall stock market value (go to the Equip platform to learn more on bear markets). Historically, the stock market has provided higher returns than cash investments (such as money in a savings account) over long periods of time. For more details, please come in contact with us, since we have webinars and blogs about this topic available on our platform.

However, rising interest rates also mean that interest rates on savings accounts and bonds increase, which make them (all other things being equal) more attractive to deploy money in, compared to the historically low interest rate environment we were in before. Furthermore, rising interest rates results in mortgage costs (and other borrowing costs) going up too, making borrowing less attractive.