Most companies and individuals have to deal with a negative rate of interest on bank deposits. The account holders have almost become familiarized with the negative interest rates on account with a large balance. The banks and other financial services also have made negative interface rates a necessity.

Since November 1st, 2020, Solaris bank AG has introduced negative interest rates on deposits of over 100,000 euros. As the Penta account gets managed by Solaris bank, this new condition will affect you if you have a high balance in your main account along with the sub-accounts. A -0.5% p.a will be levied on the deposit amount that exceeds 100,000 euros.

If you currently have multiple business accounts with Penta, a limit of 100,000 Euro will apply to every separate account. The negative interest rate settlement will attain quarterly when incurred. Follow your bank account statement to get an overview of it.

 Why All This?

With the change in conditions, Solaris bank follows several German banks that already charge interest on a huge account balance. This rate of interest is not typically levied to fill in the banks’ own stacks.

Besides, the banks had to pay a negative rate of interest on the credit amount at the European Central Bank (ECB) or the Deutsche Bundesbank. The main deposit rate or rate of interest of the ECB is presently -0.5% from September 2020. Consequently, Solaris bank tries to attempt to cover its cost.

As these main rates of interest are adjustable at any period by the institutions, Solaris bank has the right reserved to modify the deposit interest rates.

Crisis mode

The first blow to the era of the meagre and negative interest rate in Europe came when the ECB was struggling with the international financial crisis accelerated by the fall of the US bank Lehman Brothers in 2008, followed by the European sovereign debt crisis in 2010.

Though the immediate economic impacts of those crises have been successfully overcome, their influences on the real economy still continue. A decade later, this requires a different unusual policy like negative interest rates.

Structural problems

Now the investors, policymakers and economists point more to the long-term structural statements behind the shift to negative interest rates. They refer to the demographics indicating the aging population of the developed world for suppressing the demand. Also, speculation is high in technological innovation to drag the prices down.

 How to avoid Negative Interest?

If you want to avoid the negative interest, here are some of the best possible guidance for financial matters. To know some possible ways to deal with this interest rate and avoid negative interest rates on deposits that exceed 100,000 euros, read below.

Split the Credit

You can ideally split your credit amount into different accounts. With the Solaris Bank or the Penta Bank, the 100,000 Euro limits apply to only a single main account with the other sub-accounts. If you are running multiple companies and business accounts, you need to make a logical splitting up following the structure of your company. In case, you would like to invest as an individual to buy a property then also you can split the credit but you need to be sure about the terms which you will need to follow.

 Implement Investments

The next possible way to avoid negative interest is to start investing. After all, boosting the economy is the fundamental principle of the ECB in seeking the low-interest rate policy. So, you can now make investment plans like buying real estate Mallorca, investing in new equipment or company staff, etc. Real estate as an investment or real estate as a capital investment is one of the most popular and suitable ways to avoid negative interest rates for both companies and individuals. In this way, anyone can increase the capital without paying negative interest rates.

Learn Investment Opportunities

If your capital is not entirely tied up in the long-term plan, you will have a scope to seek alternative investment plans. The use of fixed-term deposits and similar policies that helps to retain your credit balance in addition to allowing you to access it at somewhat shorter notice is desirable.

Moreover, with the flexible choice of this policy maturity, you will benefit from earning positive rates of interest and an applicable return. So, being a good investor is also important to deal with negative interest rates, collection of interest, and secure money sound fairer than paying interest?