Rental guarantee deposit vs. insurance

Never saw it discussed here, so I was wondering: how do you do it?

My rental guarantee is currently 2360 CHF and I never had a deposit since I moved out of my parents place, always went with the insurance. AXA is basically the cheapest option out there as almost everyone is asking for 5%/year and often double for the 1st year.

So I’m paying 89.30 CHF per year for this insurance. Or in other words it’s costing me 3.78%/year. For me it’s a no-brainer because the expected return of my investments is higher than that and I don’t like to have blocked money.

These days, with interest rates close to nothing, it would make sense.

Just checked and Raiffeisen gives you a whopping 0.025% for the Mieterkautionssparkonto.

Would you take a margin loan at that rate ? I personnaly wouldn’t. Maybe borrow money at 1.5% and use it for a deposit.

I’ve got a conventional rental deposit account. In my mind it was : “I just need to put my security deposit somewhere”.

I’m not a fan of insurance or other financial instrument as “First Caution” or “Swiss Caution” as I don’t know how many year I’ll stay in my current flat ; I’m fine to have “money block”.

I also have private liability and household insurance with them, so I just see the whole thing as an yearly insurance cost of 360 CHF. I know 3.8% margin rate doesn’t sound great, but it makes it very convenient.

The yearly rate is calculated on a daily basis. So if you move out and don’t need it anymore, you get the rest back.

One interesting question would also be: can you switch from having an account to having an insurance policy? And the other way.

This is just credit at 4-5%

Why not borrow from IB at 1.5% instead. No-brainer, no?

Don’t forget that many places doesn’t allow an insurance.