Negative interest rates

[Kay]

I found this piece of info on an email I received from The Telegraph.

Natwest has become the first bank to warn business customers it may charge them negative interest rates on money held in current accounts. Although current plans for negative rates are restricted to business customers, fears are mounting that "pay to save" rates could soon become a reality for millions of consumers.

What the heck? If people are being charged to save, then what does that mean? Should we now max out on our credit cards and expect the CC companies to pay us for doing so rather than having to pay them any interest. Has the world gone completely bonkers?

[ruggie]

I guess a business could still see the point. They already pay higher charges for running a business account - typically some kind of flat rate plus a surcharge if they exceed an agreed number of transactions. This would just be another surcharge, based on how much the account is in credit, but cheaper than an overdraft (which the bank may not be prepared to grant). However, you'd think the effect on personal banking would be to make people go back to putting currency notes under the mattress - except that if you turn up with a wad of cash just in time to provide enough to clear the incoming debits, they make you fill in a pile of forms declaring where the money came from... I reckon the effect will be to increase the penetration of alternative forms of banking, from online-only to things like Bitcoin...

[gozomark]

I reckon the effect will be to increase the penetration of alternative forms of banking, from online-only to things like Bitcoin...

paypal for one

[Kay]

I don't like PayPal, although I use then out of necessity. We transfer money into the bank so we don't carry much of a balance with them. They froze our account a few months back because someone had made an erroneous complaint against us. Turned out he found it easier to complain rather than to ask us to refund his money, which caused us unnecessary hassle. All he had to do was email us and ask for a refund. How inconsiderate can you get?

Anyway, the way things are going here recently we'll not have any savings left so negative interest will be the least of our worries.

[ruggie]

Just a thought: will they pay interest on overdrafts?

[Kay]

It seems fair enough to me. That was pretty much my point about credit cards.