[Belgium] State notes, savings bonds or term accounts?

 The savings of Belgian households (265 billion euros in 2024) are of interest to many people, particularly since a significant part of these savings (22 billion) will be reinjected into the banking system on 4 September when the famous ‘Van Peteghem’ state bond matures, with its exceptional yield of 2.81% net.

Over the last few weeks, all the leading retail banks have been busy announcing new rates for their term accounts and/or savings bonds.

At the top of the list are ING and Belfius, which are both offering a 12-month term account at a net rate of 2.66%. At ING, the net rate can even rise to 2.8% for (new) customers who had the opportunity to pre-register in August.

KBC/CBC is not to be outdone and is also offering 2.66% net for its term account. However, there is a slight difference: the term is 13 months and not 12.

Please note that these rates only apply to new funds: the money invested must come from outside the bank. For example, you cannot fund your term account from a savings account opened with the same bank.

Next come Keytrade and Beobank, which offer 12-month term accounts with a net yield of 2.38%. Keytrade requires a minimum deposit of €5,000.

MeDirect and Argenta round off our ranking of 12-month term accounts with net yields of 2.31% and 2.03% respectively.

A Savings Bond instead?

As well as term accounts, banks also offer Savings Bond also with a 12-month maturity. KBC and Belfius are head-to-head, offering a net yield of 2.17% and 2.1% respectively. Far behind, BNP Paribas Fortis offers a modest 2.03% net.

Term account or savings bond?

A term account is a contract between the subscriber and the bank. The subscriber undertakes to lock in a fixed sum for a defined period, in exchange for which he or she receives an interest rate.

If necessary, a term account can be closed before maturity - provided the bank agrees - and a termination fee paid.

Except in special cases, there are generally no additional charges or fees for a term account.

A savings bond is an acknowledgement of debt from the bank to its customer, placed in a securities account. The term and interest rate are fixed at the time of issue. A savings bond cannot be redeemed before its normal maturity date, but it can be transferred to another bank, or even resold on the secondary market.

Note that some banks may charge opening, closing or custody fees for securities accounts, which reduces the return on investments.

And why not a savings account?

With a maximum nominal rate of 3% (ING and Argenta), regulated savings accounts do not seem to be able to compete with term accounts or even savings bonds.

However, regulated savings accounts are only subject to 15% withholding tax (compared with 30% for savings bonds/State notes and term accounts) and they are also exempt from withholding tax on up to €1,020 of interest (4). On the other hand, the return is not guaranteed and may be revised upwards or downwards if the ECB's key rate is revised (currently 3.75%).

50,000€ invested in an ING Tempo savings account at a nominal rate of 3% will therefore yield €1,428 net, i.e. €98 more than the same amount invested in a Term Account at 3.8% gross.

BEWARE: Except for the Keytrade High Fidelity account, all the savings accounts mentioned in our table are category ‘B’ accounts for which restrictions may apply, such as a maximum deposit of €500 per month at ING, for example.

Forget State notes?

[updated September 3th at 10:15 am]

- The 2024 One year maturity state bond will propose a gross interest rate of 2.75% (1.93% net), which is clearly the less attractive offer of the market.

Although we still do not know the interest rate that will be applied to the one-year State notes that will be issued on 5 September, it already seems certain that they will be less attractive than most savings bonds (we are talking about a probable net yield around 2%).

However, Medirect is trying to boost this yield by offering a cashback equivalent to 0.5% of the amounts invested in State notes - provided that the funds come from outside the bank. The bonus is also limited to €1,250 per customer. The bonus will be paid as Cashback and is therefore "net".

thanks to this helping hand, the State Bond subscribed via MeDirect will reach 2.43% of net interest. It's better, but still slightly below the best offers.

(1). The 15% withholding tax only applies above €1,020 of interest per person.

(2). Minimum period to benefit from the interest rate AND the fidelity premium.

(3). The sums invested must come from an account outside the bank.

(4). 1,020€ per person, not per financial institution.

(5). Specific conditions may apply. See the information sheet for the products concerned.