Review: Banca Mediolanum

Today we will talk of Banca Mediolanum’s Conto Free, a bank account that rewards clients in accordance with the assets they entrust to the bank.

In simple words, the higher average deposit is, the more costs decrease. It’s easy to say that this policy aims also at driving away clients with small deposits: accounts that have a average deposit under €1,500, the annual management fee is €120. On the contrary, if the average deposit is at least €3,500, the annual fee is zero.

The same kind of policy applies to interest rates: on first €3,500 deposited, the rate is zero. Interest rates (based on the Euribor rate) are calculated only on sums beyond this limit, and they depend on the total deposit of the client:

  • up to €35,000: Euribor (3 months/360) – 3.0% (=1,175%)
  • €25,000 – €50,000: Euribor – 2,5% (=1,675%)
  • €50,000-€150,000: Euribor – 2,0% (=2.175%)
  • €75,000-€150,000(*): Euribor – 1,5% (=2.675%)
  • over €150,000: Euribor – 1,5% (=2.675%)
  • over €150,000(*): Euribor – 1,0% (=3.175%)

(*) if the customer has two “service lines” (mutual fund/life insurance)

Looking at the expenses, there are up to 36 free ATM withdrawal (from any ATM) in the calendar year: beyond this limit withdrawals cost €1,03 each. Cash and cheques deposit if free in Banca Mediolanum branches (and some other banks with which there is an agreement).

In my opinion, Banca Mediolanum’s Conto Free show some interesting ideas:

  • interest rate link with Euribor rate (in this specific case maybe it is not fantastic, but it is indeed a clear and transparent mechanism).
  • interest rate that grows with deposit (I see it as a way to reward regular clients, that I always consider a good thing)

On the other side, I think that deposit levels are set quite higher for common savers, and make me suspect that it is more a marketing trick (since it is advertised the 3,175% rate, specifing that you need to deposit €150,000 and have two service lines only in small prints), rather than a real will to offer real benefits to the client. Maybe I’m wrong, but I don’t think there are so many people who deposit more than €150,000, at least not on a single bank.

Another negative element is in my opinion the ultra-high management fee in case of small deposits. Surely it is an enter barrier, but it also prevents to try Banca Mediolanum services with a small sum.

Italian translation of this post: Banca Mediolanum – Conto Free

Banche e Risparmio []