At the moment, you receive little interest on your savings. However, many people continue to save. At the start of this year, the total savings made by the Belgians amounted to almost 344 billion dollars. At the same time, 17% of savers have a loan. Does this also apply to you? If so, consider using your savings to pay off your loan. After all, a loan is more expensive than you can afford to save.
Interest rate for savings of less than 1%
Savings interest rates have fallen sharply in recent times. A few years ago, you were still receiving a certain percentage of interest, in most major banks the interest rate is now less than 1%. Loans have become cheaper for banks because the Cream Bank has lowered interest rates more and more. Saving consumers is therefore less necessary. Banks are therefore less willing to pay for it. More info on the type of savings account that offers the best return in Belgium here.
More costs for savings: taxation of savings
In addition, savers face the return on capital tax, also known as the savings tax. Anyone who has more than $ 21,333 in their savings account must pay taxes. Namely on the return on assets above $ 21.33. The Tax and Customs Administration assumes a yield of 4%. While people with a regular savings account earn less than 1% interest. In addition, inflation lowers the value of your savings, making you lose even more money.
Paying off a loan = saving money
A little interest is of course always better than no interest. A savings account is in any case preferable to a savings account in an old sock. Suppose a fire breaks out … But if you have savings and a loan, then it is wise to consider paying off this loan. The interest you pay on your loan is probably higher than the 1% you earn with your savings. So, repay your loan!
Paying off your loan also means that you will be freed from your debts more quickly. Be sure to always keep savings in reserve for unexpected expenses. So after the repayment, you don’t have to take out a loan if the car suddenly breaks down.