Direktbank

A new type of bank apparently that doesn’t spend a lot of money on brick-and-mortar branches. Direktbanks use the internet and provide interest advantages. ING-Direktbank, the German subsidiary of the large Dutch bank ING, is the first major bank in Germany to eliminate overdraft interest rates for the standard giro accounts everyone uses in lieu of checking. Overdrafts there will now be charged the bank’s normal interest rate for short-term small loans [Dispokredit or drawing credit], which they also lowered from 8.5% to 7.95%. The eliminated overdraft interest rate had been 12%; other German banks are still charging up to 18% on overdrafts. The European Central Bank’s prime interest rate is currently 0.25%.

Spiegel.de said that last year ING-Diba acquired half a million new customers. That was before they eliminated overdraft interest and other banks didn’t.

The bank’s top German executive also proposed that a [neutral, reliable] central authority should publish a list of all short-term credit and overdraft pricing schemes offered at all German banks. Perhaps the Stiftung Warentest could do it, he said, mentioning a product-testing foundation that has the reputation of Consumer Reports in the U.S.A.

Update on 21 Apr 2014: A Spiegel.de article said some smaller banks were first to end overdraft interest rates on giro accounts but it didn’t list them. The article was in praise of another bank of the Genossenschaftsbank type (a mutual?) which reduced the highest interest rate on one type of extreme overdraft.

(Dear ECKED bonk.)

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