Interest rates in Denmark

Interest rates play an important part in the Danish economy. They affect everything from the cost of borrowing money to the strength of the economy as a whole.

What is an interest rate?

Interest rates are the cost of borrowing money. It is a percentage of the borrowed money that you pay to the lender as interest. The amount of interest you have to pay depends on several factors, like the type of loan, the amount borrowed, and the lender’s risk assessment of you as a borrower.

Another important aspect of interest rates is the deposit rate, which can be either negative or positive. Negative interest rates refer to a situation where depositors have to pay to keep certain amounts of money in the bank.

This means that instead of earning interest on their deposits, they are charged an interest by the bank for storing their money. On the other hand, positive deposit rates mean that depositors earn interest on their deposits.

How do rates work?

When you borrow money, you agree to pay back the principal amount, plus interest, over a set period. The interest rate determines how much you will pay in interest – and it can be fixed or variable.

A fixed interest rate remains the same throughout the loan term, while a variable interest rate can change based on market conditions. The interest rate you will get on a loan also depends on many factors.

How do interest rates impact your finances?

Interest rates can have a significant impact on your finances. For example, when interest rates are low, it’s generally easier and cheaper to borrow money.

On the other hand, when interest rates are high, borrowing generally becomes more expensive, and it can be more challenging to get credit. When interest rates are increased too quickly, it can even lead to a slowdown in economic growth - or even recession.

Current interest rates in Denmark

See the official interest rates set by Danmarks Nationalbank here

Interest rates can change over time, depending on the state of the economy, inflation, and other factors. It can be a good idea to monitor the interest rates if you plan to borrow or invest in Denmark.

The current-account rate is the interest rate that banks receive for deposits in their accounts at Denmark’s National Bank. The rate is set by Denmark’s National Bank and is used to influence the overall level of interest rates in the economy.

Get a positive interest rate with Lunar Bank

Another aspect of interest rates is how much interest you earn on your personal bank account. The interest rate can even be negative, which means that you pay a certain amount of interest for having your money placed in the bank.

Conversely, a positive interest rate on your bank account means that you earn interest on your deposit. In other words, you can earn interest from simply having your funds deposited in the bank.

At Lunar Bank, we offer Denmark’s best interest rate of +1.5% on up to 100,000 DKK*. And that’s if you use our free plan.

With our other plans – Lunar Standard, Plus, and Unlimited – the interest rate is even higher. And we also don’t operate with negative interest rates.

All the mentioned Lunar interest rates are variable, calculated annually and paid out on a monthly basis.

*The comparison is made by Lunar and based on data from from July 5, 2023. Lunar’s interest rate offer was compared to the interest rate of bank accounts without any special requirements or prerequisites from Denmark’s 10 largest banks, measured on working capital. Get +1.5% interest on amounts up to 100,000 DKK. For amounts above 100,000 DKK, the interest rate is 0%. The interest rate is variable, calculated annually, and paid out monthly.

Last updated 29/01/2024. This article is based on general information, and there may be special rules and circumstances that you should be aware of. This should not be considered counseling.