The interest rate is back 

3 min 370

For some months now, savers have again enjoyed rising interest rates. Especially the overnight deposit account is enjoying strong growth in Germany. With CashPlus, UnitPlus has developed a globally innovative call money 2.0 superior to traditional call money accounts. Today, we will examine why this is the case in greater detail.

Introducing the classic call money account

According to Statista, almost 17 million Germans maintained a call money account at the end of 2023. In contrast, less than 13 million Germans invest their money in equities. Call money accounts are, therefore, a prevalent form of short-term investment. They allow flexible deposits and withdrawals every day and without a fixed term. You can access your money at any time, and in the meantime, you get an attractive interest rate for mostly six months. The interest rate itself, as well as other conditions, are determined by the respective bank and vary from each other. Overnight deposit accounts are almost always linked to current accounts but do not allow direct payment. Instead, the money must first be redeposited for this purpose. Money held in call money accounts is protected by deposit insurance up to €100,000.

What is called money 2.0?

CashPlus from UnitPlus is not a classic overnight deposit account but an innovative further development that improves the disadvantages of a traditional one. It enables an interest rate that is directly linked to the central bank policy of the European Central Bank (ECB). The interest rate is 3.98% per annum, with interest credited on a pro-rata basis on business days. There are no conditions, such as maximum amounts or a maturity limit of 6 months. Instead, the interest rate is dynamically adjusted to the central bank’s policy so that the interest rate is always optimal. At the same time, payments can be made worldwide free of charge and without foreign currency fees with CashPlus. Because the money invested with CashPlus is regarded as special assets, all deposits are protected beyond statutory deposit insurance, making CashPlus suitable for more significant balances.

The comparison matters

CashPlus

Classic call
money account

Interest

3.98%, adjustment to short-term euro interest rate at any time

At selected banks, between 2.5% and 3.9%, but only for a maximum of the first 6 months. Thereafter significantly lower, approx. 1%

Interest earned

On weekdays

Monthly or quarterly

Duration

No restriction

Mostly only 6 months interest guarantee, afterward often > 50% lower

Minimum and maximum amount

Unrestricted

Often a maximum deposit of €100.000

Security

Special assets, thereby protected in any amount

EU deposit protection up to 100.000€

Costs

0.6% of the invested money per year, no fixed fees

Usually free of charge, but subject to conditions (term, current account must be opened)

Payment transactions

Pay anytime worldwide, free of charge, even without foreign currency fees with the UnitPlus Mastercard plus 0.1% cashback

Money can be deposited and withdrawn to a reference account, no direct payment transactions are possible

Infrastructure

Interest on the capital market. The performance of a deposit bearing interest at the short-term euro interest rate (€STR) + 0.085% is shown in a portfolio.

Deposit with a bank

Security of the interest yield

Long-term, although marginal value adjustments may occur in the meantime due to the so-called bid-ask spread on the stock market, but these do not play a role in the long run

Fully given at maturity except in the event of bank insolvency

Not all interest rates are the same

Often, banks advertise a lock-in interest rate that looks attractive for the first six months and then drops noticeably. Therefore, we looked at the effective annual interest rate as of February 08, 2024, i.e., the average interest rate for the first six months and the other six months. The result is that, after deducting all costs, CashPlus is by far the most attractive interest offer at 3.38%. The other features, such as the possibility to pay worldwide for free and 0.10% cashback, are not even considered here.

Conclusion

When choosing the right call money account is always worth looking at the actual annual interest rate. At the same time, aspects of security, flexibility, and the other conditions in the fine print (only for new customers, payout interval, requirements such as opening a checking account, etc.) should also be considered. 

If you would like to tell us what you think or have any questions, we would be happy to hear from you: support@unitplus.eu.

Legal risk notice

This article is not intended as an investment recommendation. Nor is it advice to buy or sell financial instruments. There are risks associated with capital market investing that can lead to a total loss. Historical performance is not a reliable indicator of future performance.

Fabian Mohr