German Court Rules Some Bank Negative Interest Practices Unlawful

The Federal Court of Justice allows negative interest rates on checking accounts under strict transparency rules but bans them on savings and deposit accounts.

The Federal Court of Justice (BGH) in Karlsruhe ruled that negative interest rates, or 'Verwahrentgelte,' are generally permissible for checking accounts but must meet transparency standards.
Negative interest rates on savings and deposit accounts were deemed unlawful, as they conflict with the purpose of such accounts and disadvantage consumers.
The court found that many banks' contractual clauses on negative interest rates were unclear and therefore invalid in cases brought by consumer protection groups.
Roughly 13% of German banking customers were charged negative interest rates during the low-interest period, often starting from balances as low as €5,000.
Consumers affected by these charges must actively seek refunds, as the court declined to mandate automatic repayments by banks.