Streamlining Your Savings Account

Switzerland is a nation of savers. But many savers aren’t getting the most out of their savings.

Low interest rates

Savings account interest rates are currently somewhat low. While inflation is also relatively low, interest yields hardly keep up with devaluation. What many savers do not know is that they could get a lot more out of their savings, even with conventional savings accounts.

The interest rate is the deal-maker

The lowest annual interest rates for savings accounts are right at the bottom at 0 percent. But the highest-yield Swiss savings accounts for adults have interest rates as high as 1 percent per annum. That may not seem like a lot, but over the years that interest can add up to a sizeable chunk of money. Over the long term, the compounding interest effect can multiply your yields.

Example: A difference of 0.5 percent in interest rates applied to 20,000 francs of savings translates into more than 1000 francs more interest earned over a 10-year term. The more savings you have and the longer you keep them, the bigger that difference will be. That is why it is so important to compare savings accounts. You can also simulate interest earnings based on interest rates using the savings calculator.

Savings accounts with interest rate tiers

A number of banks also offer interest growth savings accounts, the interest rates of which increase as time goes by, as long as no withdrawals are made. The savings account comparison on moneyland.ch accounts for these specialized yield rate offers.

Savings accounts: withdrawal limits vary

Savings yield rates vary between banks. Most Swiss banks also offer several different kinds of savings accounts, and here too, yield rates may vary.

The general guideline here is: The tighter the restrictions on withdrawals (lower withdrawal limits and longer notice periods), the higher the interest yield rate. Banks will often provide higher-yield “investment accounts” which have more restrictions than their regular savings accounts. The downside is that there are tight limitations for penalty-free withdrawals.

Savings accounts with promotional rates

Teenagers, young adults, and students benefit from higher interest rates, currently as high as 1.25 percent. However, these promotional interest rates for youth and student accounts normally only apply up to a certain limit.

Typically, limits range between 10,000 and 25,000 francs, depending on the bank. The portion of the account balance that exceeds that limit will yield interest at the standard rate applicable to adults. The interactive Swiss savings account comparison accounts for these limits.

Savings do not belong in a checking account

Many savers do not fully understand the difference between a savings account and a private account (also called a personal account, checking account, or current account). Private accounts are designed for frequent transactions, and may be linked to a debit card, for example. Savings accounts are designed for long-term savings.

Private accounts normally have much lower interest rates than savings accounts. In exchange, they also have much fewer restrictions on withdrawals and transactions than most savings accounts do.

More on this topic:
Savings account comparison
Interest calculator
The best savings account tips
Student bank accounts in Switzerland compared
Youth bank accounts in Switzerland compared