A major high street bank yesterday signalled the introduction of negative interest rates by warning customers it may have to levy charges for deposits.
Advertisement
Millions of customers with savings accounts in Britain are already suffering from historically low returns, with many popular savings accounts paying close to zero.
The threat of negative interest rates was probably not one which pensioners, who voted overwhelmingly for Brexit, were expecting their vote to deliver.
The short answer is no.
It seems that while business customers may be hit with negative rates, when it comes to personal banking banks are far more likely to charge account fees to cover their costs to avoid putting off customers.
Why is NatWest doing this?
The last Monetary Policy Committee meeting saw the base rate held at 0.5% despite strong predictions that a cut to the interest rate would be made.
The Bank of England has kept interest rates steady at a historic low of 0.5% since the height of the global financial crisis in 2009.
The letter warned: “Global interest rates remain at very low levels and in some markets are now negative”.
‘Dependent on future market conditions, this could result in us charging interest on credit balances’.
Bank of England governor Mark Carney has said he does not approve of interest rates falling below 0.25%. When interest rates are this low, the difference between those two rates gets squashed and so do the banks. This has fallen from 3.29 per cent in January, according to financial information website Moneyfacts.
Prominent commentators on personal finance have said the move could see savers remove their money from banks. Carney has indicated cutting rates to zero is the lower bound as negative rates would could hurt banks and building societies. A deposit of €10,000 at the European Central Bank would be worth €9,999.89 a day later. The Bank of Japan also introduced negative rates earlier this year.
But we now have a conflict between the desire from Government and the Bank of England to create more challenger banks to offer other options to the big Five and the need to adjust policy to stimulate a faltering economy. If you’re in the market for a loan, you can actually make money from borrowing at some banks. But it’s doubtful that consumers will be affected any time soon. “The first one to break that taboo for customers is going to face an enormous uproar”.
Advertisement
This could lead to a bank run.. I cant access it myself to put it under the mattress.. This could trigger a bank run.
