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Banking News

PostFinance Expands Negative Interest Rates

January 31, 2020 - Benjamin Manz

On March 1, 2020, PostFinance will raise its negative interest rate from the current -1% to a more average -0.75%. But along with its change, PostFinance is expanding negative interest rates to a greater number of customers.

Currently, PostFinance applies a -1% negative interest rate to private customers who hold more than 500,000 francs in savings accounts or private accounts. A lower threshold of 250,000 francs applies to customers who only hold savings accounts and do not make use of other PostFinance services.

New -0.75% negative interest rate

From March 1, 2020, PostFinance is changing the negative interest rate which applies to balances in excess of the above-stated thresholds from -1% per annum to -0.75% per annum. “This adjustment makes sense, considering that the Swiss National Bank’s guide rate is also -0.75%,” says moneyland.ch CEO Benjamin Manz. A rate of -0.75% per annum also applies at the majority of other Swiss retail banks which use negative interest rates.

Curiously, PostFinance now uses the term “customer asset fee” in place of “negative interest rate” in its terms and conditions. It can be assumed that by labelling its negative interest rates as fees, PostFinance hopes to minimize negative customer reactions.

New standard threshhold of 250,000 francs

Another change affects the threshold for account balances above which negative interest rates are applied. The threshold has been halved to 250,000 francs for PostFinance savings account and private account holders.

Only customers who with 25,000 francs or more invested in investment products (like retirement funds) and customers who have life insurance or mortgages from PostFinance will continue to benefit from the current 500,000-franc negative interest threshold.

This change means that a much larger number of PostFinance customers will be affected by negative interest rates.

In a communication with moneyland.ch, PostFinance stated that its being prohibited from participating in the lending market makes it particularly vulnerable to negative interest rates. It states that it is no longer able to absorb the cost of negative interest rates, which is why it is increasingly passing these costs on to customers.

What should affected customers do?

Private PostFinance customers who will be affected by the change should consider doing the following: transfer the portion of your money which exceeds the negative interest threshold to other banks in order to avoid paying negative interest on your assets.

Because it is likely that negative interest thresholds will be lowered again in the near future, dividing your assets between multiple banks is recommended. You can find the most favorable banks using the moneyland.ch savings account comparison, which also accounts for negative interest rates.

Investing with PostFinance investment products for the sole purpose of avoiding negative interest rates is not recommended. This is especially true in the case of investment funds, as these often command high ongoing fees. Make sure to compare the terms and conditions of investment products before investing money. Important: When you use investment products instead of savings accounts, your risk of loss is much higher.

How do the changes affect business customers

The change from a maximum of -1% to -0.75% negative interest per annum also affects business customers at PostFinance. But negative interest thresholds for business customers are variable. In some cases, businesses can be charged negative interest rates on their full account balances.

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Expert Benjamin Manz
Benjamin Manz is CEO of moneyland.ch and an independent expert on banking and finance.