PSS sent letters to clients in summer that would reduce interest on building savings to 0.5% pa Building savings are gradually losing their attractiveness. This is another proof. What is better, leave money in building savings or move it somewhere else.
To whom PSS reduces interest to 0.5% pa
This change does not apply to all flat-rate clients of Prvni stavebni sporitelna. It only sent to some clients. I do not know the exact key to whom they sent it. I have not been a PSS client for many years.
From the letter sent to the PSS client with an existing contract, I cut out the most important part. In the picture you can read what PSS offers and think it really serious.
I remember that these letters came to people who had been building savings for over 6 years and had the feeling that they had saved more than 50% of the target amount.
PSS does not mention anything about this topic on your site or it is well hidden. I’m not going to be a detective. I assume that building saving is not doing well and PSS offers not only new clients, but also old ones, no extra conditions.
Why PSS reduces interest on building savings
Currently, interest rates are at historical lows. This applies to interest on deposits and the same applies to interest on loans.
If PSS wants to compete at least with mortgages in banks, it has to offer low interest on credit products.
And if you want to offer low interest on loans, you can not pay savers high interest on building savings deposits.
The difference between interest on deposits and loans generates income for the First Building Savings Bank. PSS profits are very decent, but longer periods are falling more than sales are falling.
It’s a simple math. If they want to profit, they have to cut interest on building savings. They will never reduce their profits.
What conditions will new clients receive?
These changes do not apply to new clients. You will not get interest of 3% pa as ever. You will not get even 2% pa, which was real in the past.
Currently, the highest possible interest on a new contract is 1% pa This is a reality. For some building savings tariffs, interest is even lower in PSS.
Planned Changes in Building Savings
The first building society is no exception. Interesting conditions have all building societies. Some even cut interest on contracts older than 6 years before PSS.
In 2018, € 1,328.80 should be added to get the full state premium. From 2019 onwards, the full state premium will be up to € 2,800.
This change will probably not please any client who has building savings. Since 2019, there will be a number of radical changes. Most of them are significantly disadvantaged by building savings and the group of people for whom it will make sense will be substantially reduced.
I have described all the essential information about changes in building savings since 2019 in the article “Building Savings in 2019 Awaiting Radical Changes”.
Where to value money better than building savings?
I have received this question quite often in recent times. And I do not even wonder very much. Building savings, whether it be PSS or another building society, offers very low value for money.
If you want to appreciate the money more than in building savings, you will not succeed even in other building societies. It will not be possible either on savings accounts or term deposits. Interest is at historically low levels.
Bank products earn little in the long run. You can earn a lot more in mutual funds. On the EIC merchant’s website (www.eic.eu), I filtered out the euro funds and ranked them according to revenue over the last 7 years, which is roughly equivalent to building savings, which is at least 6 years old.
- I have found there to date 373 mutual funds that have a yield over the past 7 years higher than 2% pa
- The yield of more than 4% pa over the past 7 years has 305 funds.
- If I went even further, eg. In the past 7 years, almost 250 mutual funds have yields higher than 6% pa.
Want to earn more than building savings? If you would like to consult the selection of the appropriate product, please write to me via the form below. I believe we will find a solution that you will enjoy.