Negative savings interest rates

obsessed_saver

If the Bank of England cuts interest rates on Thursday could the interest paid on our savings fall below zero?

http://news.bbc.co.uk/1/hi/programmes/moneybox/7809530.stm

Lokolo

No. How could they fall below 0? That would mean we would have to pay to keep our savings in the bank.

What is with these threads of stupidity lately?

butterflymum

In fairness to the OP, quote from article states:

"

If the Bank of England cuts interest rates on Thursday could the interest paid on our savings fall below zero? Negative interest rates, where the bank charges us to look after our savings, have been seen before. "

Lokolo

No.

Banks charged us for having accounts and banking with them. They don't charge us for having savings or charged interest on them.

nilrem_2

From the BBC

A negative rate of -1% would mean that someone depositing £10,000 would get back just £9,900 at the end of the year, effectively paying the bank £100 for the privilege of holding their money for them.

Would anyone really be stupid enough to keep money in an account where the value of the deposit goes down? :eek:

Even if the BOE rate reaches 0% there will still be savings accounts available that pay positive interest rates, only banks that have plenty of cash and are happy to lose customers would offer Zero or negative rates.

nicko33

nilrem wrote: »

From the BBC
Would anyone really be stupid enough to keep money in an account where the value of the deposit goes down? :eek:

yes, loads of people, if you include "goes down in real terms"

Lokolo

nicko33 wrote: »

yes, loads of people, if you include "goes down in real terms"

Have you seen inflation lately? Its 4.1%.... nowhere near 0% or negative. Long way off that I should think, way after savings rates going down to 0% or less.

But even if inflation went down or whatever, it would still be more beneficial to take the money out and keep it at home where its at 0% rather than negative%

nilrem_2

nicko33 wrote: »

yes, loads of people, if you include "goes down in real terms"

A few who didn't realise might but I bet that as soon as most savers understood the banks were deducting from them rather than adding interest people would be withdrawing from such accounts in droves!

Masomnia

I suppose it depends what the negative rate was. If it was -0.1% for example, I think I'd still keep it in the account just so I know it's safe. Fire, theft etc.

Just_landed

Lokolo wrote: »

No. How could they fall below 0? That would mean we would have to pay to keep our savings in the bank.

What is with these threads of stupidity lately?

So where is the 37 billion comming from ?;) :whistle: :silenced:

john_s_2

Masomnia wrote: »

I suppose it depends what the negative rate was. If it was -0.1% for example, I think I'd still keep it in the account just so I know it's safe. Fire, theft etc.

It's a grim prospect but I have to agree. I really don't think I'd be happy having a five figure sum of cash lying around. I get a bit twitchy when there's more than £100 cash in our tin!