Negative interest rates

scorpiojim

If we go into negative interest on savings, will it start to cost me money to hold my savings in a bank. If so is this covered by the gaurantee of 85,000 pounds?

eskbanker

FSCS would continue to protect the actual balance but wouldn't reimburse the deductions if that's what you're hoping for!

Mr.Saver

No savings account will advertise a negative interest rate. Because people can always find a place with 0% interest rate and put all their money in it. The place is not necessarily a savings account or current account, it could be anything, such as the cash holding on an investment platform.

AnotherJoe

Or under my mattress. I'm taking applications now.

Thrugelmir

2 year Government Gilts went into negative yield this morning. Appears as if dark days are being priced in. 

DiggerUK

You can get a zero rate in any current account, much higher than any negative rates on offer..._

caveman38

If  negative interest rates were introduced. Would it be only on instant access accounts or is there provision with the T&C of existing Fixed Term accounts to change the rates you signed in to?

RG2015

DiggerUK said:

You can get a zero rate in any current account, much higher than any negative rates on offer..._

The UK is quite unusual in offering free banking and this could change in the future. Hence current accounts could all have a charge which is equivalent to a negative rate of interest.

The banks do provide their customers with an extensive and comprehensive banking package which must be quite costly to provide. I always find it curious that we expect this high quality error free service to be provided free of charge.

eskbanker

caveman38 said:

If  negative interest rates were introduced. Would it be only on instant access accounts or is there provision with the T&C of existing Fixed Term accounts to change the rates you signed in to?

It'll always be prominently clear for any account whether it's fixed or variable rate.  Fixed term accounts are usually (but not always) fixed rate....

caveman38

I mean can an institution renege on the T&C of a FR Bond. I mean if the interest rate on a 5 yr. bond was say 3% and the institution started to struggle where to offset that money elsewhere because of base rate at 0%. Could they change the rate you agreed to when opening the account?

RG2015

caveman38 said:

I mean can an institution renege on the T&C of a FR Bond. I mean if the interest rate on a 5 yr. bond was say 3% and the institution started to struggle where to offset that money elsewhere because of base rate at 0%. Could they change the rate you agreed to when opening the account?

Fixed rate is just that. If the institution started to struggle then it loses money or in the extreme it becomes bankrupt in which case the FSCS cover would become available.