Interest rate (Zinssatz)
An interest rate is the price of money: a percentage of an amount, charged or paid per period. A Zinssatz (interest rate) of 3% per year on €1,000 means €30 changes hands over that year — earned if the €1,000 sits in a savings account, owed if it's borrowed. Same rate, same math, opposite direction.
Why it matters
The interest rate is the single number that prices both sides of a household balance sheet. A Tagesgeld (instant-access savings) account pays it on a balance; an overdraft or consumer credit charges it on a debt. Reading a bank statement means recognizing which side of the transaction the quoted rate applies to.
The two rates rarely match. Banks typically pay a lower rate on deposits than they charge on loans — the spread between them is a core part of how banks make money. That gap is a recurring pattern in German banking: the Dispositionskredit (overdraft facility attached to a Girokonto, checking account) tends to charge a rate many times higher than what a Tagesgeld account pays on savings.
Worked examples
1. Savings — Tagesgeld account. €1,000 sits in a Tagesgeld account at an illustrative 3% per year (not a current market rate). After one year: €1,000 x 0.03 = €30 in interest, before any tax on capital income. The balance grows to €1,030.
2. Debt — overdraft. The same €1,000, but owed as overdraft debt on a Girokonto at an illustrative 11% per year. After one year: €1,000 x 0.11 = €110 in interest owed — more than three times the savings example, on the identical principal and time period. Overdraft rates sit far above savings rates because unsecured, short-notice credit carries more risk for the lender, and few customers shop around for a better Dispositionskredit rate the way they might for a savings account.
3. Reading the direction. The rate alone doesn't say whether money flows toward the account holder or away from them — that depends on whether the underlying amount is an asset (savings, a bond, a Festgeld deposit) or a liability (a loan, a credit card balance, an overdraft). The same 5% quoted on a savings account and on a consumer loan produces opposite outcomes for the account holder.
Don't confuse with
The nominal interest rate (the quoted percentage) is not the same as the effective annual rate (effektiver Jahreszins) — that gets its own article. The nominal rate ignores how often interest compounds within the year and any fees bundled into the product; the effective annual rate folds both in, so it can end up noticeably higher than the nominal figure on the same loan or account. German consumer credit disclosures are required to state the effective rate precisely so borrowers can compare products, since two loans with an identical nominal rate can carry different real costs.
Check yourself
€2,000 sits in a savings account at an illustrative 4% interest rate per year. How much interest (in euros) does it earn after one year?
€500 of overdraft debt sits on a Girokonto (checking account) at an illustrative 12% interest rate per year. How much interest (in euros) does it cost after one year?
Two loans both quote a nominal interest rate of 6% per year. One compounds interest monthly and adds a processing fee; the other compounds once per year with no fee. What does this tell you about their cost to the borrower?
A bank pays 2% per year on Tagesgeld (instant-access savings) and charges 10% per year on its Dispositionskredit (overdraft facility). What does this gap illustrate?