Negative interest rates means cash is better than banks

[countryfree]

I'm surprised not to read anything about this, but with all that euro-craziness with negative interest rates, it means that putting your money in the bank equals shrinking your savings. So it's better to hide some cash under the mattress.

I wonder if the negatives interest rates could be linked to the fight against large banknotes like the €500 bill.

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[crypto_curious]

Well, my mattress is having 0% interest rate. My bank is offering me 5% up to 2000 GBP and 1.5% up to 15000 GBP (I live in UK). That's still far from being negative, mate.

[Sourgummies]

I'm surprised not to read anything about this, but with all that euro-craziness with negative interest rates, it means that putting your money in the bank equals shrinking your savings. So it's better to hide some cash under the mattress.

I wonder if the negatives interest rates could be linked to the fight against large banknotes like the €500 bill.

You're willing to keep thousands under your mattress? A bank is "supposed" security. If anything, it makes sense to charge you for keeping your money secure and safe.

[WEBcreator]

Well, my mattress is having 0% interest rate. My bank is offering me 5% up to 2000 GBP and 1.5% up to 15000 GBP (I live in UK). That's still far from being negative, mate.

UK hasnt use the negative interest rate so far however some of the country in EU and including some part in asia has used this system so instead of getting interest , you will be paying the bank to keep your money safe. This system will of course encourage more people to use their money instead of keeping it in banks

[Meuh6879]

I'm living in EuroZone and Bitcoin offering +50% of interesting rate ... in July 2016.
Nothing to comment here.







Why people of all countries don't understand ?
I don't understand ...

[zodiac3011]

I don't understand about this too. What's the meaning of negative interest rates? It's just like charging fees to keep your money safe but one thing is that the fee is damn too high I think

[SFR10]

The whole purpose of banks holding your money is to ensure it's security but you can't achieve same result if you hide them under your bed mattress. Unfortunately the whole negative rates and deflation of it's value, has make most people affected to worry but what they forget is, having a better value than more content with same value is always better. On the other hand, you could try to keep your money at home but one day, you might come back to an empty house

[countryfree]

The whole purpose of banks holding your money is to ensure it's security but you can't achieve same result if you hide them under your bed mattress.

Correct, security is not assured at your home, so you can put your money at a bank. Just don't put it in a bank account. That would cost you money, because of those negative interest rates. So the solution is to rent a private coffer, a safe box at a large bank which has a massive vault under its offices, and store cash in there. A thick stack of high denomination bank notes. You won't pay anything besides the rent for that safe box.

[jchst]

The whole purpose of banks holding your money is to ensure it's security but you can't achieve same result if you hide them under your bed mattress.

Correct, security is not assured at your home, so you can put your money at a bank. Just don't put it in a bank account. That would cost you money, because of those negative interest rates. So the solution is to rent a private coffer, a safe box at a large bank which has a massive vault under its offices, and store cash in there. A thick stack of high denomination bank notes. You won't pay anything besides the rent for that safe box.

I believe this feature will be for some low numbe of people i dont know how much is the cost of this,and it can get stealed anytime,the same way happens on moovies,i would consider invest into crypto world,being bitcoin or other altcoin with a long history as bitcoin,banks wont be able to keep generating interest if no one gets a loan from them ,and without work no one can repay,soo its a snowball starting to hit each country.

[tyz]

Currently, the interest rate for storing money on your bank account is higher than 0. Is is 0.34% on average (SEPA zone).

Further, the interest rate is low indeed but the inflation rate is, too. So people who saving money do not make real loss. I did a comparison of the inflation rates and the interest for bank account from 1980 to 2013 and I figured out that the inflation rate was mostly a little higher and the interest. If the inflation is 5% and you get 4.5% interest, then your money loses 0.5% in value. If the interest rate is 0 and the inflation rate is 0 then you do not make loss. Seen this way, we are even doing better today.

I'm surprised not to read anything about this, but with all that euro-craziness with negative interest rates, it means that putting your money in the bank equals shrinking your savings. So it's better to hide some cash under the mattress.

I wonder if the negatives interest rates could be linked to the fight against large banknotes like the €500 bill.

[Hirose UK]

I'm surprised not to read anything about this, but with all that euro-craziness with negative interest rates, it means that putting your money in the bank equals shrinking your savings. So it's better to hide some cash under the mattress.

I wonder if the negatives interest rates could be linked to the fight against large banknotes like the €500 bill.

I think saving money under a mattress is what old people do. seriously mate, many people know that trick. it's not secure. anyone can enter your room and grab your money, voila! your money is gone.

[cooldgamer]

It may be true in the way of pure interest, but having your money in a bank protects you from robbery, fire, etc.  Not to mention trying to make any large purchase with cash now will end up not going very smoothly.  The majority of people will shrug it off rather than go to a measure as drastic as keeping large amounts in cash.

[vero]

Aren't we already in negative interest rate territory? The latest inflation figures are running at an annual 0.7% rate and the Feds Funds rate is at 0.25% thus making real interest rates -0.45%

[shulio]

Aren't we already in negative interest rate territory? The latest inflation figures are running at an annual 0.7% rate and the Feds Funds rate is at 0.25% thus making real interest rates -0.45%

You are not making any sense, what the OP is trying to say that there are some country that will adopt negative interest rate blatantly thus reducing your saving over time if you put your money in banks. The current interest rate should be over 0 percentage thats for sure unless your country adopt negative interest rate as well

[countryfree]

Aren't we already in negative interest rate territory? The latest inflation figures are running at an annual 0.7% rate and the Feds Funds rate is at 0.25% thus making real interest rates -0.45%

You are not making any sense, what the OP is trying to say that there are some country that will adopt negative interest rate blatantly thus reducing your saving over time if you put your money in banks. The current interest rate should be over 0 percentage thats for sure unless your country adopt negative interest rate as well

Precisely. Right now, my savings account bring me a 0.4% interest. If my bank makes the decision to reduce their interest by half a point, just like the ECB did, that would mean negative interest. I don't think my bank will do that in the near future, but it means I need to think about an alternative just in case.

[alyssa85]

I'm surprised not to read anything about this, but with all that euro-craziness with negative interest rates, it means that putting your money in the bank equals shrinking your savings.

Actually no.

At present negative interest rates are only charged to banks who deposit their excess reserves at the central bank.

All banks are required to hold a certain amount of reserves - statutory reserves, and these were placed with the central banks and the central bank paid interest on this.

Once interest rates went to zero, the banks started to play an arbitrage game. They got money from depositors, paid them zero, and then placed this money at the central bank and earned 0.25%. If the sums involved are large, they earn a lot of money for simply using their depositors money.

What some central banks like the ECB have done, to discourage this, is to say, if you are depositing money in excess of the statutory reserve, we will charge you to hold this extra money. In other words a negative interest rate.

The idea is to encourage normal banking, where the bank took money from depositors and then lent it out to business, instead of storing it at the central bank.

Negative interest rates don't affect the ordinary saver. They just affect banks who were depositing too much at the central bank.

[coinzat]

I believe that applying zero interest is good for any country economy. because this will lead them to invest it in projects that benefit both of the individual and his community instead of putting those money in banks for ages waiting collecting their interest

[Mike Christ]

Hopefully this article will clear up some confusion about what's going on: https://mises.org/library/where-negative-interest-rates-will-lead-us

Here are some relevant excerpts:

The process can be as simple as the central bank charging its member banks for holding excess reserves

In effect, the banks are being extorted by the central banks to increase lending or lose money. The banks have no choice. If they can’t find worthy borrowers, they must charge their customers for the privilege of having money in their checking accounts. Or, as is happening in some European banks, the banks try to increase loan rates to current borrowers in order to cover the added cost.

In European countries where NIRP reigns, so far, the banks are charging only large account holders for their deposits. So, these large account customers are scrambling to move their money out of banks and into assets that do not depreciate.

If the central banks can charge a half percent, they can charge anything they wish and, given the Keynesian mindset that led to the insanity of negative rates in the first place, probably will do so.

[Daisy14]

If you hide cash under your mattress and you get robbed, you will blame yourself. It's best to keep it in the bank, at least you know how much is removed per month, or you store your cash as btc.

[naidray]

If you hide cash under your mattress and you get robbed, you will blame yourself. It's best to keep it in the bank, at least you know how much is removed per month, or you store your cash as btc.

Buying bitcoins to trade cash huh? That's a good idea considering that there is an uptrend of price right now but I do believe that keeping it in a bank would be best if the money wouldn't be used for any transactions just yet.

[Carlsen]

As far as I have heared, no bank has charged negative interests from a private customer in the Eu.
But they start to take more and more fees for services that were free half a year ago.
And I'm sure, if this negative interest situation keeps on or gets worse, banks will determine a maximum balance above that they charge private persons.

[Atdhe]

It is not correct. There are banks that charge you negative interest rates for Euros. I know one, has -0.2% for deposits > 500K for example (but they charge then -.2% for whole amount not just for the excess). But for sure it is not the only one.

The problem with cash is that you can not buy expensive things with cash. The cash transaction limit is 15K Eur and in some countries it is or will be just 1K (I believe Italy, maybe France, correct me if I am wrong). So indeed, the negative interest rates affect just the wealthy people, but those are the ones that can not afford to have all the money in vaults, because then they can not pay with them.

And yes, negative interest rates are huge incentive to buy Bitcoin, Gold or other currencies with positive interest rate.