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The RBS banking group has warned 1.3 million customers they could be charged negative interest rates if the Bank of England cuts base rates below zero.
The group, which includes NatWest, wrote to its business and commercial account holders about the potential changes, which mean they could lose money even when they are in credit.
The letter said: "Global interest rates remain at very low levels and in some markets are currently negative.
"Dependent on future market conditions, this could result in us charging on credit balances."
The Bank of England's base rate currently stands at the historically low rate of 0.5%, where it has been for more than seven years - and some economists believe it should be cut further to stimulate the economy.
Source: Sky News
From October 1st, the Dutch bank [ABN Amro] is adjusting its conditions to state that the bank can give negative interest rates to account holders with a business checking or -savings account, ANP reports.
Source: NL Times
(Score: 3, Informative) by Anonymous Coward on Wednesday July 27 2016, @08:27PM
This may be (Score:4, Interesting)... but it is also (Score:-1, Wrong)...
Interesting to note: When putting money in interest-bearing accounts with a bank, you do NOT have cash on deposit, withdrawable on demand.
This is technically true [xkcd.com], but not in the way you imply. The cash is withdrawable on demand, just not in a "drop by the local branch and ask for $100,000 at once with no prior notice" way. The reason you can't get all the cash ASAP is that banks don't just sit on the money in a vault. You can get access to the cash whenever you want, but you may need to give them a few days of notice before hand to actually get the physical currency for you to take out.
You can find numerous examples of this, but one such is here [ussfcu.org]. Note how the checking account has 0 limits, and the savings account only limits the number (not amount) of some types (but not all) withdrawals.
If you really wanted to have all the cash on hand at a moment's notice, pay for something like a safety deposit box.
In effect, you actually extend a loan of the "deposited" assets, on terms dictated by the debtor bank, withing their legal regulatory framework.
No. You are extending a loan to them on the terms you both agree to. If you don't like the terms the bank offers, then don't deposit money with them.
I don't understand what counter-proposal you are suggesting. Besides the law (regulatory framework), what else should interfere in the willing contracting between two competent parties?
It's absolutely the weirdest arrangement on earth. I wish I were able to dictate the interest rate I chose to MY creditors!
That is just the contract you had agreed to. If you prefer to have a static interest rate, look into something like a CD ("Certificate of Deposit"). Of course there are drawbacks of the payment being less liquid, but the option does exist.
As for dictating interest rates, you can do the exact same thing. You can go to any competent party and tell them "if you give me $1000 on these terms, I'll pay you back at some variable interest rate subject to the following terms." If they agree, then you are dictating the interest rates to your creditors.
Things like the 2008 "financial crisis" will be understood in different dimensions than before.
The worst part is that you are right in that the financial crisis is generally misunderstood (for example, the "Greek bailouts" were actually bailouts to German banks and other creditors who had lent money to Greece). However, given what you have said, I think you the reasons are probably not the ones that you think they are.
(Score: 2) by isostatic on Wednesday July 27 2016, @09:03PM
Your money does not sit in a vault (http://m.youtube.com/watch?v=_Er69b4HMl8)
Why would anyone give you money for the privilege of storing it for you?
(Score: 2) by len_harms on Wednesday July 27 2016, @10:07PM
I like this video on what the market is. Not sure if he is correct on the wave theory he puts forward. He does make a good hypothesis for it though. That would need to be mathmatically proven for it to be less than a theory.
https://www.youtube.com/watch?v=PHe0bXAIuk0 [youtube.com]
The downside is it starts off like a pitch to a pyramid scheme.
In this case storing money is how banks are allowed to by our government and its regulations to create credit. The risk they take on is passed onto you by being the middle man. Meaning they can fractionally loan out your money but you only get a fraction of the loan interest value back however it is very low risk to you. As they are taking on more of the risk than you are. That is the trade off. You to can get about the same interest rates as banks do. However, you need to take on more risk than just dropping in into a bank. They do not work for 'free'.