Households continue to save in low-yield accounts
Households are continuing to sock away money in savings accounts at Sweden's four biggest banks, despite the fact that those banks offer among the lowest interest rates on the whole market, according to a report from Svenska Dagbladet newspaper on Saturday.
"It's fascinating," says Christina Söderberg, an economist for Compricer, a website where people can compare prices on services like banking and insurance, "that the big banks offer such bad interest rates and still have so many customers. Maybe it's due to a lack of knowledge among consumers - that people think the big banks feel safer than a credit institution."
The big banks, SEB, Nordea, Swedbank and Handelsbanken, dominate the savings market, despite the fact that today there are other actors (with deposit insurance) which are offering significantly higher interest on invested capital, especially when the capital is bound at the bank for a year before it is withdrawn, reports SVD.
For example, the big bank, Handels offers .90 percent interest rate on savings, which is the least generous, according to the newspaper. However, some smaller banks and credit institutions offer more, for instance, the bank Marginalen yields 2.60 percent interest, and the credit institute Bluestep Finans yields 3.05 percent.
Handelsbanken explains the reason for its low interest on savings accounts boils down to the fact that people who have home loans with the bank have to pay little interest.
"When the interest rate levels are low, which they have been for a while now, the interest rates are low both on deposits and loans," Henrik Westman, head of press for the bank, tells the newspaper. "So, while your interest on savings maybe isn't much to hurrah about, maybe you have a home loan where the interest is low."
Johan Hagbarthf, an economist at SEB, says that in the long run, saving has to do with more than money in an account. "There are other forms of savings," he explains, "which in all likelihood, will yield greater returns."