ING vs VW Bank Tagesgeld interest rates comparison, Digi Mart USA News: ING and VW Bank are regularly raising their Tagesgeld (daily money account) interest rates for new customers. ING has now followed up, paying up to 4.00 percent per year, while VW Bank offers 3.75 percent.
However, the higher rate alone does not make the better offer. Savers should look closely at the conditions before deciding.
Which bank pays more interest depends mainly on how long the money stays in the account.
ING currently offers 3.75 percent per year for four months on a Tagesgeld account. Customers who simultaneously open a checking account receive 4.00 percent per year.
VW Bank offers 3.75 percent per year for six months.
Both promotions apply only to new customers. Both banks allow the Tagesgeld account to be opened independently of a new checking account.
Without a checking account, ING pays 3.75 percent per year, like VW Bank.
Customers who open an ING checking account and their first extra account in the same step receive 4.00 percent per year for four months. Both ING promotional rates require that no extra account existed with the bank in the previous twelve months.
The ING checking account is free for people under 28 or with monthly incoming payments of at least 1,000 euros. Otherwise it costs 4.90 euros per month.
The Tagesgeld account with the higher promotional rate is opened automatically when the checking account is opened.
Savers should note that checking accounts can affect their Schufa credit score, particularly overdraft facilities and the associated credit limits. Schufa, Germany’s credit reporting agency, considers numerous other factors when assessing creditworthiness, so the number of checking accounts alone does not determine creditworthiness.
Tagesgeld accounts are generally unproblematic in this respect, since they are run on a credit-balance basis only and have no credit limit.
ING offers the higher rate initially with a new checking account. VW Bank guarantees its 3.75 percent per year for six months, two months longer.
In addition, VW Bank’s follow-on rate for online account management, at 1.00 percent, is 0.25 percentage points higher than ING’s. A calculation shows the differences on a 10,000-euro investment.
In the first four months ING leads with the checking account offer. However, despite the higher rate, it does not win overall.
After six months, VW Bank earns about 41.67 euros more interest than the ING combined offer, and 50 euros more than ING Tagesgeld without a new checking account.
Possible account fees must also be considered. The ING checking account is free for people under 28 or with at least 1,000 euros in monthly incoming payments.
Otherwise, 4.90 euros per month is charged. With a 10,000-euro investment, the higher ING rate over four months yields only about 8.33 euros more than the variant without a checking account.
Two monthly fees already exceed this interest advantage. Anyone opening a checking account only for the higher Tagesgeld rates should therefore ensure the account remains free to maintain.
The calculation does not account for reinvesting any income earned in the interim, although such effects are small over short terms. The follow-on rates are variable and can change at any time, which may affect the result.
The other differences between the two Tagesgeld offers are less significant than the interest rate and the checking account requirement. VW Bank pays interest monthly, while ING distributes earnings once a year on December 31.
VW Bank’s promotional rates apply to amounts of any size, while ING limits its special conditions to investment sums of up to 250,000 euros. That should be enough for most savers.
Splitting larger sums across several banks can also make sense, because statutory deposit insurance protects only balances up to 100,000 euros per customer. Both VW Bank and ING are covered by the German deposit protection scheme in the event of a claim, so the two offers are equal on this point.
Both offers are also tax-simple, meaning the banks automatically deduct capital gains tax, the solidarity surcharge and, where applicable, church tax. An exemption order of up to 1,000 euros per customer can be set up with both offers.
In conclusion, ING leads in the short term, while VW Bank wins for longer investments. ING offers the higher promotional rate of 4.00 percent, but requires opening a checking account at the same time.
Anyone wishing to invest for up to four months and who meets the conditions for a free account earns more interest with ING. Without a new checking account, both banks initially pay 3.75 percent.
For an investment over six months, VW Bank comes out ahead: its longer interest guarantee yields more in the example calculation, and its follow-on rate is also higher. Both banks are equal under statutory deposit insurance, which covers up to 100,000 euros per customer and bank.
