On 1 February 2010, Nordea will launch its new CurrentAccount for daily banking. The interest rate structure of the new account differs from traditional current accounts, since it has interest rate tiers that reward customers’ savings and loyalty. Customers also benefit from rising interest rates.
- We are restructuring personal customers’ current accounts, and we now offer customers a superior solution for their daily banking needs. Once interest rates normalise and start rising, all our customers will benefit from the interest rate tiers of our new account. The account will be especially beneficial to our Key Customers, as the top tier is reserved for them, says Jussi Mekkonen, head of Household at Nordea in Finland.
The higher the interest rate level and account balance, the higher the interest rate
In Finland interest rates on personal customers’ current accounts are usually low and fixed, and customers do not benefit from rises in the interest rate level.
- The new account yields better interest for customers both when the general interest rate level rises and when the account balance grows. The current interest rate level is exceptionally low, but if we look at the years 2000 – 2009, the average Euribor rate exceeded four per cent in four of those years. If we assume that the interest rate level is four per cent and the balance of the new CurrentAccount at least 4,000 euros each month, the pre-tax annual benefit received by the customer compared to our old current account is at least 27 euros. If the account balance exceeds 8,000 euros, the benefit is already more than 100 euros per annum. As you can see, this is a significant change, says Mekkonen.
Nordea DepositRate changes slower than market rates
The interest rate of CurrentAccount is tied to a new reference rate called Nordea DepositRate, a reference rate that varies in line with market rates. The deposit interest payable on the new account equals Nordea DepositRate deducted with the margin defined for the relevant interest rate tier. Nordea DepositRate was quoted publicly for the first time today on 1 February 2010 at 1.75%. With this reference rate value, the interest rate of Nordea’s Key Customers is 0.50% for funds exceeding 6,000 euros in the account.
- The value of Nordea DepositRate is based on market rate trends, but it is meant to change slower than the market rates. Minor interest rate changes estimated to prevail only briefly will not affect the level of Nordea DepositRate, says Jussi Mekkonen.
The current value of Nordea DepositRate is available on Nordea’s website. Similarly to Nordea Prime rate, changes in the reference rate are published at least 14 days before the change enters into force.
Further information on the new account is available at nordea.fi/newaccount.
For further information:
Jussi Mekkonen, Household and Group Marketing, Finland, +358 9 165 88128
Kati Tommiska, Chief Press Officer, +358 9 165 42320