Germans are known as savers, and during the pandemic, when it was not even possible to spend, even more was put aside. But with these price increases, most Germans are at best left at zero at the end of the month.

The wealth indicator of the association of German savings banks indicated last year that only some 15% of their clients spend absolutely everything they earn during the month – or even more than that. Everyone else has something left over: the savings rate in Germany in 2020 was as much as 16.1% of citizens' earned income, last year “only” 15%.

But in this time of inflation and rising prices, that has changed drastically: “We expect that, due to significant price increases, in the future 60% of German households will have to spend their entire disposable income – or even more than that, every month on mere living costs,” said the president of the association of German savings banks (DSGV) Helmut Schleweis to the newspaper Welt am Sonntag.

Admittedly, German savings banks (Sparkassen) are specific financial institutions, and from the time when they were owned by the federal states and when the state actually guaranteed their capital, there remains their obligation to accept everyone as their client, regardless of income, while commercial banks could, if they wished, choose only those with better incomes.

More and more are “going into the red”

But alarm bells are also ringing at the association of People's and cooperative banks (Volks- i Raiffeisenbanken): “High inflation is taking away consumers' purchasing power and thus reducing their ability to save,” said the president of the association of such banks (BVR) Andreas Martin to the same newspaper. Many have not yet fallen “below zero” only thanks to savings accumulated during the pandemic, which in other words means that they are already spending more than they earn.

His estimate is that the savings rate in Germany this year will be at best only some 11%, but bankers expect only this autumn and winter an even more serious deterioration in the financial situation of their savers, especially among those with lower and middle incomes. At the savings banks association they note that many still do not want to accept the fact that they are actually in financial difficulties but are recording a serious increase in, actually very unfavorable for bank customers, overdraft loans that are opened when the account falls “below zero”. 

Such overdrafts have “expanded significantly”, apparently in order to somehow bridge the period until the next salary or income. But interest on account overdrafts is practically without any regulation, so the Green party is now calling for their level to be limited. Current interest rates “on the minus” are somewhere around 10%, warns Green politician Stefan Schmidt, so that party considers it “necessary to legally regulate the level of these overdraft interest rates”, he told Welt am Sonntag. Because it can be expected that even more citizens will find themselves in a situation where they have to exceed the amount in their account.

Source: dw.com