At least 41 banks in Germany are now charging negative interest rates on deposits, at a time in which decentralized finance (DeFi) apps can yield 8% a year on users’ savings.

According to a report published by rel=”nofollow”, dozens of German banks are imposing negative interest rates on large deposits over €100,000 ($110,500), and at least seven are even imposing negative interest rates on small deposits.

The report uses data from German consumer product comparison portal Verivox, which has examined the policies of over 800 local banks to determine 41 published negative interest rate policies on their websites. The number of banks with these policies nearly doubled since November 2019.

In the report, Verivox’s Managing Director Oliver Maier stated:

The impact of the wave of negative interest rates has increased significantly again this year.

Several other banks reportedly also charge negative interest rates on large deposits, but haven’t added these policies to their websites. Banks are charging negative interest rates as the European Central Bank (ECB) has kept its negative interest rate at -0.5%, forcing the institutions to either take the losses or pass them on to their customers.

The ECB’s chief Christine Lagarde has defended the policy, despite receiving complaints from banks claiming it has been damaging their earnings. Lagarde has even claimed the interest rate will only rise after the eurozone’s inflation meets the ECB’s target under 2%.

DeFi’s Rates Hit 8%

While people are losing money on their savings in Germany, the decentralized finance space seems to be one of the possible answers to the problem. Using platforms like Compound and dYdX, users can earn up to 8.25% a year on their DAI stablecoin holdings.

The Dai Savings Rate (DSR), a savings feature on Maker’s Oasis decentralized application that “from a counterparty risk perspective, be no riskier than simply holding Dai,” is currently at a 7.75% APR.

While there are various risks associated with holding cryptocurrencies on protocols like those mentioned above, the rewards are seemingly worth it for many. Data from DeFi Pulse shows there are currently nearly $900 million worth of cryptocurrency locked in DeFi apps.

In the cryptocurrency space it’s also possible to earn interest on crypto holdings via crypto exchanges like Binance and OKEx, which let users lend their funds to margin traders on the platform to gain interest.

Featured image via Pixabay.