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Belgium’s loyalty premiums on savings accounts – a system unique in Europe – are under increasing scrutiny. Designed to reward savers for stability, these premiums are increasingly seen as a barrier to financial mobility and a source of hidden costs. With the government considering a shift to a single interest rate, and mounting pressure from consumer groups and financial authorities, the future of this decades-old practice hangs in the balance.
<h2>The Loyalty Premium: A System Past Its Prime?</h2>
<p>For years, Belgian banks have routinely offered loyalty premiums on savings accounts. However, a recent analysis reveals that only a handful of institutions – Bunq, Izola Bank, and NIBC – eschew this practice altogether. A significant 30% of the 57 accounts surveyed offer a base rate *higher* than the loyalty premium, but the benefit is only realized after twelve months of holding the funds. This delay, coupled with complex calculations, often results in savers earning less than advertised.</p>
<p>The Belgian Competition Authority highlighted these issues in October 2023, suggesting the premium’s removal due to its complexity and hindrance to account portability. This sentiment was echoed by the Financial Services and Markets Authority (FSMA) in February 2024, which stated that the rationale for the premium is “closely and historically linked to market conditions that no longer exist.”</p>
<h3>A Historical Anomaly</h3>
<p>The loyalty premium system originated in the 1980s and remains a uniquely Belgian phenomenon. No other European country employs a similar mechanism. This isolation raises questions about its continued relevance in a modern financial landscape.</p>
<h2>Pressure Mounts for Change</h2>
<p>Several attempts have been made to reform or abolish the loyalty premium. In November 2024, seven PS deputies proposed legislation to ban the premiums entirely, advocating for a minimum interest rate of 1.5% for savers, backed by a safeguard mechanism for banks. While the proposal gained consideration, it ultimately stalled.</p>
<p>Consumer advocacy groups like Test-Achats are pushing for a simpler solution: merging the base rate and loyalty premium into a single, transparent rate. Nicolas Claeys, an expert at Test-Achats Invest, argues, “Banks cling to the loyalty premium because it allows them to advertise a higher rate than they actually offer. It’s almost the only sector I know where you can advertise something you’ll never deliver.” He goes so far as to call it a “legal scam” in some cases, particularly for monthly savings plans.</p>
<blockquote class="c-quote ">
<p>“Banks cling to the loyalty premium, because it allows them to advertise a higher rate than they actually offer.”</p>
<div class="c-quote__author">
<p>Nicolas Claeys</p>
<p>Expert in savings and investment at Testachats Invest</p>
</div>
</blockquote>
<h2>The Real Cost to Savers</h2>
<p>The impact of the loyalty premium on actual returns can be significant. Consider a savings account with a 0.75% base rate and a 1.5% loyalty premium, totaling 2.25%. Depositing €250 per month for a year results in €3,000 saved. However, withdrawing those funds after twelve months yields only 0.98% interest, as the premium only applies to funds held for the full year. It takes two years to reach 1.59% and three years to achieve 1.80%, meaning the advertised rate is rarely, if ever, realized.</p>
<p>The Ombudsman for Financial Services has also reported a rise in complaints related to the calculation of loyalty premiums, particularly concerning portability and the timing of payments. The system’s complexity often leads to misunderstandings and frustration among consumers.</p>
<h2>Potential Future Scenarios</h2>
<p>In 2023, the previous government reached an agreement with the banking sector to enhance transparency, limiting the number of account options and requiring quarterly reporting of base rates and premiums. However, this fell short of abolishing the premium altogether.</p>
<h3>A Phased Approach?</h3>
<p>The National Bank of Belgium (BNB) suggests a phased reduction of the premium over three years as a potential compromise. This could involve gradually decreasing the premium ceiling, expressed as a percentage of the base rate. This approach aims to balance consumer protection with the need to maintain financial stability and avoid discouraging fixed-rate mortgage lending.</p>
<p>Furthermore, the BNB and FSMA are pushing for banks to display a “truth rate” – the actual interest earned by customers based on their deposit behavior. This would provide greater clarity and allow for more informed financial decisions.</p>
<h3>The Rise of Alternative Accounts</h3>
<p>The growing dissatisfaction with traditional savings accounts is fueling the popularity of alternative options. Fintech companies like Bunq, Izola Bank, and NIBC, which offer straightforward, single-rate accounts, are attracting customers seeking simplicity and transparency. This competitive pressure may further accelerate the move away from loyalty premiums.</p>
<h2>What Does This Mean for Savers?</h2>
<p>The future of loyalty premiums in Belgium remains uncertain. However, the increasing scrutiny and pressure for change suggest that a significant shift is likely. Savers should be aware of the complexities of the current system and actively compare accounts to find the best rates and terms. Consider accounts with transparent, single interest rates, and be mindful of withdrawal penalties that can negate any potential premium benefits.</p>
<h3>Did you know?</h3>
<p>The rules dictate that withdrawals are applied to the funds with the *least* accrued loyalty premium. This means recent deposits are prioritized for withdrawal, potentially minimizing premium loss.</p>
<h3>Pro Tip:</h3>
<p>If you anticipate needing access to your funds before twelve months, a simple, single-rate account may be a better option than one with a loyalty premium.</p>
<h2>FAQ</h2>
<ul>
<li><b>What is a loyalty premium?</b> A bonus interest rate offered by some Belgian banks to savers who maintain funds in their accounts for a specified period (usually 12 months).</li>
<li><b>Why are loyalty premiums controversial?</b> They are often complex to calculate, can result in lower-than-advertised returns, and hinder financial mobility.</li>
<li><b>Are loyalty premiums common in other European countries?</b> No, Belgium is the only European country that widely uses this system.</li>
<li><b>What is the FSMA’s position on loyalty premiums?</b> The FSMA believes the rationale for the premiums is outdated and no longer necessary.</li>
<li><b>Could loyalty premiums be abolished?</b> It’s a possibility, but a phased approach is more likely, potentially involving a gradual reduction over several years.</li>
</ul>
<p><b>Want to learn more about maximizing your savings?</b> <a href="#">Explore our other articles on personal finance</a> or <a href="#">subscribe to our newsletter</a> for the latest insights.</p>