Your money sits safely in your account. And that's exactly where it loses a little value every year. That's not a contradiction, but the most uncomfortable truth about saving: safety in your account protects you from fluctuations, but not from inflation.
The short answer. If inflation is higher than the interest rate, your savings shrink in real terms, even if the number in the account stays the same. At the preliminary inflation rate of 2,8 percent for July 2026, 20.000 euros lose almost 4.900 euros of purchasing power over ten years in a current account paying no interest, and around 1.500 euros in a savings account at an assumed 2 percent. So it makes sense to keep an emergency fund in your account and let the rest work, invested with broad diversification.
I see this almost daily in my conversations here in Lüdenscheid. Someone has saved with discipline for years, a five-figure sum sits in an instant-access savings account, and it feels good. Better safe than sorry. But the question hardly anyone asks is the most important one: what does inflation do to that money in the meantime? The headlines revolve around rising or falling interest rates. What that concretely means for your savings is something almost no one tells you.
Why your money in the account shrinks
The mechanism is unspectacular, and that's exactly why it's so effective. No number on your bank statement ever goes down. The 20.000 euros are still there tomorrow. It's just that next year you can buy a little less with them than today. Even when the instant-access account earns a bit of interest again, it rarely beats inflation. So your money loses value more slowly, but it still loses value.
A model case makes it tangible. We use the inflation rate the Federal Statistical Office reports for July 2026: 2,8 percent (Statistisches Bundesamt, preliminary figure, as of 08/2026 — Destatis publishes the final number on 12 August 2026). Suppose 20.000 euros are sitting there.
If they sit in a current account paying no interest, you lose the full 2,8 percent of purchasing power every year. After ten years, in real terms these 20.000 euros only buy what is worth about 15.100 euros today. Almost 4.900 euros are gone, even though no number in the account ever went down.
If they sit in an instant-access savings account at an assumed 2 percent, you are left with a real loss of about 0,8 percent per year. After ten years, around 1.500 euros of purchasing power are missing. Considerably less than with the current account, but still no growth, just a slower melt.
This is a model calculation and not a guarantee. The interest rate is an assumption, the inflation rate is the official but still preliminary figure for July 2026. And that is exactly where you see the real point: the difference between a current account and a savings account decides how fast it goes. Whether it goes, it does not decide. You can find the respective current inflation figure in the consumer price index of the Statistisches Bundesamt (Federal Statistical Office).
Three situations, three consequences
Whether this affects you, and how much, depends on the situation you're in right now. Broadly there are three, and something different applies to each:
- Liquidity in your account: If interest rates rise, you get a bit more again. Even so, instant-access savings rarely beat inflation. The part of your money that just sits there for years mainly works toward losing value.
- Financing planned: Rising interest rates make loans and home financing more expensive. If you have a larger purchase or a property in mind, you should run the terms more carefully now than you would have half a year ago.
- Long-term wealth building: A single interest-rate step changes little here. Anyone building up over many years with a plan won't be thrown off by a single headline. That's precisely the advantage of a plan. How big your pension gap really is, the pension gap calculator shows you.
What you can concretely do
The solution isn't to clear everything off the account in a panic. The order matters. First you set your emergency fund, usually three to six months of expenses, available at any time. This money belongs exactly there, in the account, without fluctuation. Only after that do you look at the rest, meaning the amount that has been sitting there for a long time without you really needing it in the coming years.
Money in your account isn't wrong. Your emergency fund belongs exactly there, reachable at any time and without fluctuation. The problem is never the account itself, but the excess on it that sits for years and only works in inflation's favor.
For money you won't need for many years, the math looks different. Anyone building up over the long term through a broadly diversified fund investment historically had significantly better chances of beating inflation, but accepts fluctuations in return. Many immediately think of an ETF. It stubbornly tracks an index, while an actively managed investment fund is steered. Both are fund investments. Which route fits you depends on your goal and your time horizon, and that's something to clarify beforehand, not on the side. The savings plan calculator shows you how a monthly contribution can develop over the years. Tangible assets also play a role for some; you'll find more on that in the article Gold and silver as tangible assets.
If you don't know where to start, a sober look at the status quo helps. The three honest questions from the financial check are a good starting point, and I answer common questions about money and provision in the FAQ.
So the real question isn't whether interest rates are currently rising or falling. It's this: which part of your money actually works for you, and which part just lies around and quietly loses value? Once you've sorted that out cleanly, there's no need to rush, and you make the rest with a calm hand.
Frequently asked questions about money in your account and inflation
How much money should stay in your account?
Your emergency fund belongs in your account, usually three to six months of expenses, available at any time and without fluctuation. The part beyond that, which just sits there for years, mainly works toward losing value. That remainder is better put to work for you.
Does instant-access savings lose purchasing power too?
Yes, as soon as inflation is higher than the interest rate. The article's model case uses the official but still preliminary inflation rate of 2,8 percent for July 2026. An instant-access savings account at an assumed 2 percent then loses about 0,8 percent per year in real terms, so 20.000 euros are worth about 18.500 euros in real terms after ten years. In a current account paying no interest, it would be only about 15.100 euros.
What can I do about the loss of purchasing power?
First you set your emergency fund, and only then do you deal with the rest. Money you won't need for many years can be invested with broad diversification, for example through an investment fund, in return for which you accept fluctuations. Tangible assets such as gold and silver can also play a role as an admixture.
Related reading:
- Gold and silver as tangible assets
- Financial check: three questions for more clarity
- Wealth building with a plan
Eduard Strekert is a financial advisor for Deutsche Vermögensberatung AG (DVAG), tied agent. This article is general information and does not replace personal advice. It does not constitute investment or tax advice.