The interest rates being paid out by banks are at a record low while fees and charges are on an upward trend, as a moneyland.ch analysis shows. But bank customers who simply throw in the towel and accept a bad deal are missing out. The potential to save is as notable as it ever has been.
High fees, low interest
This year, Swiss consumers could potentially save more than 6 billion francs according to moneyland.ch calculations. That amount indicates how much money bank customers could collectively save by switching to a bank which offers the best conditions for their needs. The moneyland.ch study accounted for the costs of private accounts (including debit cards), savings accounts, pillar 3a savings accounts, 3a retirement funds, credit cards, mortgages and online trading brokerage services. Had the study also included services like consumer loans and asset management, total potential savings would have been remarkably higher.
Mortgages: 2.6 billion francs
Much to the disappointment of mortgagors, interest rates on mortgages have not fallen to the same degree as other interest rates. While interest rates for savings accounts at at a record low, mortgage rates are higher than they were in the summer of 2016. The major differences in mortgage terms and conditions between lenders remain unchanged.
Online mortgage providers charge the lowest interest rates, but do not provide the same level of consultation as conventional mortgage providers. If Swiss mortgagors were able to refinance their mortgages prematurely and switch to the most affordable mortgage without paying penalties, they would collectively be able to save an estimated 2.6 billion francs. That comes to around 1980 francs in annual savings per mortgagor.
Savings accounts: 1.4 billion francs
Surprisingly, major financial optimization potential is presented by Swiss savings accounts with their low 0.1% average interest rates (for adult account holders). One reason for this is because of the huge amount of assets held in savings accounts (around 300 billion francs). The other reason is that there are major differences in the interest rates used by different savings accounts. In total, bank customers could collectively add more than 1430 million to their savings by switching to accounts with higher interest rates. Divided between adult bank customers, those savings come to 240 francs per year for each bank customer.
Private account: 841 million francs
Swiss private accounts for adults no longer pay out any interest. Youth and student accounts pay out an average of just 0.4% interest. Fees for account administration, transactions and debit cards, on the other hand, have gone up in recent years. Average bank customers below the age of 25 can collectively save up to 264 million francs per year by choosing the right account. The total adult population of Switzerland above the age of 25 could save around 577 million francs per annum (97 francs per capita).
Credit cards: 610 million francs
Credit card use is on the rise, with credit card accounts also being used by mobile wallets (like Apple Pay). Potential savings per card average 92 francs per year, or 610 million francs annually for all Swiss credit cards combined. That estimate does not even account for prepaid cards and platinum credit cards. The difference in price between a credit card with no annual fee and a high-end platinum card can be as high as 868 francs per card. One reason for that price difference is that platinum card holders enjoy various benefits.
Pillar 3a savings accounts: 159 million francs
The average interest rate for 3a retirement savings accounts is just 0.46%. Here too, the differences in interest paid out by different accounts is notable. Retirement savers with 3a savings accounts holding an average of 22,000 francs could earn as much as 220 francs more per year in interest by choosing the right account. That is many times the average of 44 francs per account. If all retirement savings were to be placed in the account offering the highest interest rate, combined Swiss 3a retirement savings would increase by around 159 million francs.
Pillar 3a securities: 157 million francs
The more risky 3a retirement funds are still much less popular than savings accounts. Estimates place the number of 3a retirement fund memberships at 685,000, with each of these holding an average of around 31,000 francs in the corresponding fund. The potential to save on retirement fund costs is substantially greater than that of 3a savings accounts. Investors can save 229 francs on average (up to a maximum of 502 francs) per annum by choosing the right retirement fund. Comparing the costs of retirement funds ahead of signing up is important.
Securities trading: 156 million francs
Swiss tend to be risk-averse, and generally shy away from speculative investments. This is one reason why online trading is growing at a slow pace. Those who already make use of brokers would do well to compare costs because savings potential is high. Investors can save as much as 1470 francs per year. Potential savings for the average investor come to 375 francs per year. Collectively, traders could save up to 156 million francs annually.
Comparing is key
In Switzerland, switching banks is even less common than switching insurance providers. While loyalty may be a virtue in other aspects of life, it can be an expensive exercise where banking is concerned. Regularly comparing fees, charges, interest rates and services is highly recommended. Sticking with a bad deal only benefits the service provider at your expense.