News Negative interest rates
- Thread starter rainforests1
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ledboots
Peace
flyingsnail
Forum Legend
- Joined
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Yes and people have been receiving negative rates in the US for years. The only issue here is that when banks offer negative nominal rates it encourages people to hold cash instead. This is one reason why monetary systems have a positive rate of inflation, it allows banks to offer negative interest rates without negative nominal rates. That is, if your inflation rate is 2% and you only get .5% in your account your rate of interest is in fact -1.5%. Open any checking or savings account in the US right now and your interest rate, real interest rate, is negative 1~2%.
Clueless Git
Plant powered
As me pooter doesn't have a Euro symbol on it I'll do this in £'s: 500k Euros is about £400K.
The trick here would be not to have more than £399,999.99 in any one bank account and you would avoid negative interest.
Any mo-fo that runs out of banks they can keep their cash deposits below that threshold in would have to be sitting on absolutely millions in cash.
If the idea here is to encourage those with absolutely millions in spare cash to invest directly in business's themselves then I do think that's fair. Yes.
Clueless Git
Plant powered
With multiple £400k's under your mattress that would make you a bank, Ledders.
Would you really want to be one?
If they have success with this, it's very possible they'll later do it with people with less money. I also expect other banks to do the same thing if they have success with it. It could start a very bad trend.
ledboots
Peace
Yes, but put it under your mattress and only earn -2%. If you can't break even:bank vs mattress, why bother with a bank?
Blobbenstein
.......
You would think people with that much cash would try and make their money work for them and invest it in some way anyway.
(Just to say for people in the UK that are unaware and reading this if you have smaller cash savings you can find banks that pay 3-5% or even 6% interest on certain amounts, you have to set up an account and make sure you read the terms and conditions but you shouldn't accept very low rates of interest on savings.)
(Just to say for people in the UK that are unaware and reading this if you have smaller cash savings you can find banks that pay 3-5% or even 6% interest on certain amounts, you have to set up an account and make sure you read the terms and conditions but you shouldn't accept very low rates of interest on savings.)
flyingsnail
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The bank offers greater security. Putting a few thousand under your mattress is one thing, but putting 100's of thousands is another.
But in addition to paying negative real rates, many people end up paying negative nominal rates at their banks due to bank fees. Whether you call the fee a negative interest rate or something else makes no difference.
When you invest the money becomes less liquid, as such anybody that is prudent is going to keep some of their wealth liquid to manage short-term spending and investment needs.
flyingsnail
Forum Legend
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They already do, they are called bank fees. If you calculated the bank fees as a negative interest rate, generally speaking, those with lower balances will tend to pay a higher rate of negative interest.
