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Squeegee Longtail
11th Apr 2018, 12:48
Just received this from my IOM bank:

Negative Interest Rates - Euro Accounts

We will be introducing a negative interest rate for Euro current accounts with effect from 14 May 2018.

We regularly review client interest rates taking into consideration global financial markets and the economic environment. Unfortunately, we have been placed in this difficult position as a result of the continued market conditions surrounding the Euro currency, which are outside of our control.


What is changing?
• For balances of €100k and above - a negative interest charge of 0.60% will be applied quarterly to the full balance in your account. This will be calculated in the same way we calculate credit interest, and will be deducted from your balance and shown on your statement as ‘negative credit interest’.

• For balances below €100k - you will not be charged a negative rate and will continue to receive an interest rate of 0.00%.

No action is required

Is this widespread, or should I look for a new bank?

Highway1
11th Apr 2018, 12:52
Swiss banks have been doing it for some time and also some German banks I believe.

Smeagol
11th Apr 2018, 13:04
So if one is lucky enough to have a million Euros in said bank why not instruct them to open 10 new accounts and have just under the 100,000 in each.

Would work wouldn't it?:}:}

ian16th
11th Apr 2018, 13:11
Swiss banks have been doing it for some time and also some German banks I believe.

The interest rates paid or charged, by Offshore Banks, depend upon the currency that the accounts are held in.

Swiss Francs have paid low rates for yonks.

ExXB
11th Apr 2018, 13:12
There has been a run on CHF1000 notes. Many Swiss see that it is better, and perhaps safer, to put their money in their mattresses.

In Euroland the central bank rate is effectively negative. So commercial banks, which park their overnight money in central banks, have these costs which are being passed on to the punters.

Oh, you should make a habit of looking for a new bank every six months or so. They have no loyalty to you and you could find a better deal elsewhere.

ShyTorque
11th Apr 2018, 13:41
Just goes to reinforce the view that banks have become inefficient and top heavy. If they can't make money out of money, what are they doing?

Captivep
11th Apr 2018, 15:47
A few weeks ago I saw an advert from a german bank offering a negative interest rate on a loan - in other words they were paying you to borrow money!

As I recall, the maximum you could borrow was very small, though.

ExXB
11th Apr 2018, 15:48
ShyTorque,
They are making money by charging customers to deposit with them. 0.65% is more than they are paying.

RAT 5
11th Apr 2018, 19:29
There was a discussion about what -ve% interest rate would cause a run on the banks with cash withdrawal. There was no consensus. However, the real problem is, except for restaurants, supermarkets, the local market, some installer traders etc., it is difficult to spend cash. Anything internet = no. Airline tickets, theatre tickets, car rental, hotels, Amazon. So yes, you can withdraw cash, but then you still need a credit card and a credit balance, usually.
Short & curlies. And still they pay bonuses. Makes you cry.

topradio
11th Apr 2018, 19:38
There was a discussion about what -ve% interest rate would cause a run on the banks with cash withdrawal. There was no consensus. However, the real problem is, except for restaurants, supermarkets, the local market, some installer traders etc., it is difficult to spend cash. Anything internet = no. Airline tickets, theatre tickets, car rental, hotels, Amazon. So yes, you can withdraw cash, but then you still need a credit card and a credit balance, usually.
Short & curlies. And still they pay bonuses. Makes you cry.


I hired a car in Greece last year and they would only take cash. Also you can pay off your credit card balance at a bank with cash.

galaxy flyer
11th Apr 2018, 20:07
Cash is the answer.

GF

G-CPTN
11th Apr 2018, 20:22
There was somebody who visited PPRuNE who advocated gold.

Does anyone know how gold has fared in the last ten/five years?

Fareastdriver
11th Apr 2018, 20:38
In the last five years it has dropped from around $1,700/oz to around $1.300. Five years before that it was around $1,000.

http://http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart

G-CPTN
11th Apr 2018, 20:40
In the last five years it has dropped from around $1,700/oz to around $1.300.

So we are left with Bitcoin?

Gertrude the Wombat
11th Apr 2018, 20:53
So we are left with Bitcoin?
Which has collapsed somewhat spectacularly since December 17th. Something to do with various countries and online platforms banning it as a scam, perhaps? - although its lack of scalability can't have helped.

tdracer
12th Apr 2018, 02:34
Strange - on this side of the pond interest rates on savings, etc. have been slowly going up. Still at historically low levels, but I've got a couple 'simple' accounts returning over 1%. I have my 401k (retirement savings) in a 'stable value' bond fund at 2.5%.

Tankertrashnav
12th Apr 2018, 09:11
I've heard of first world problems but I see this as a "rich world" problem. Down here among the less well heeled its no problem. I have a Santander 1-2-3 current account which still pays 1.5% (down from 3% when it first started) plus various other little bonuses for having direct debits, use of its credit card etc. I assume the problems start when you have to find a home for large sums by which I mean anything in 6 figures. You wont mind if I refrain from getting my violin out though!

SARF
12th Apr 2018, 13:41
And Everyone sings the praises of the cashless society.
As mentioned on many items now cash is useless. This trend will accelerate.
Today’s youth never use cash.
So in countries like Germany where the euro keeps their currency artificially low, the the perma recession in the rest of Europe keeps interest rates low, negative rates will be impossible to avoid..
The saver is still bailing out the spender/borrower This will continue untill deflation kicks in and clears the decks. Or all the savers loot has gone ..
Looks like the USA is much better placed but they always go for an early clearout in a recession. Trash a few banks and shareholders ..
the euro area was years off the pace and its structural issues exacerbate the situation
U.K. some where in the middle.
Japan. Totally fk..Ed

ShyTorque
12th Apr 2018, 15:22
Today’s youth never use cash.

I wish my daughter thought that.... my wallet's often plundered soon after she gets home from uni.

racedo
12th Apr 2018, 18:00
I wish my daughter thought that.... my wallet's often plundered soon after she gets home from uni.

Friends daughter said to him...........

" A girl's first love is her Daddy"

His reponse was

Until she realises that daddy has a Wallet, then
"A girl's first love is her Daddy's walllet."

Jack D
12th Apr 2018, 21:46
Strange - on this side of the pond interest rates on savings, etc. have been slowly going up. Still at historically low levels, but I've got a couple 'simple' accounts returning over 1%. I have my 401k (retirement savings) in a 'stable value' bond fund at 2.5%.

May I respectfully suggest you buy Swiss francs .. 100,000 chf in 2003 was worth approx 55k US $ . Today the same amount is equal to 105,000$ .. not counting some compounded interest that would have accrued on both currencies . Just put them in a box under your mattress and double your money in $ or € every 15 years or so

Gertrude the Wombat
12th Apr 2018, 21:55
May I respectfully suggest you buy Swiss francs .. 100,000 chf in 2003 was worth approx 55k US $ . Today the same amount is equal to 105,000$ .. not counting some compounded interest that would have accrued on both currencies . Just put them in a box under your mattress and double your money in $ or € every 15 years or so
One does wonder about the long term sustainability of this, though, when one hears stories of people with decent professional salaries eating horse because they can't afford beef at Swiss prices.

Jack D
12th Apr 2018, 22:06
One does wonder about the long term sustainability of this, though, when one hears stories of people with decent professional salaries eating horse because they can't afford beef at Swiss prices.

Don’t be daft .. horse or foal meat is popular in Belgium or Italy not so much in Switzerland . I was talking about currency appreciation, not the cost of living which I agree is high, on the other hand there are very few “working poor “ buy the francs and live somewhere else ..

racedo
12th Apr 2018, 22:24
One does wonder about the long term sustainability of this, though, when one hears stories of people with decent professional salaries eating horse because they can't afford beef at Swiss prices.

Neigh.............. I said Neigh wrong with Horse Meat.

tdracer
13th Apr 2018, 01:58
May I respectfully suggest you buy Swiss francs .. 100,000 chf in 2003 was worth approx 55k US $ . Today the same amount is equal to 105,000$ .. not counting some compounded interest that would have accrued on both currencies . Just put them in a box under your mattress and double your money in $ or € every 15 years or so
Most of that appreciation must have occurred prior to 2010 - I was there for a couple weeks in Sept. 2010 and the exchange rate then was pretty much one-to-one.
This is my retirement account - now that I'm retired I'm not inclined to gamble with it. That's why it's been in a stable value bond fund for the last 2 years - had I left it in stocks I could have nearly doubled my money, but run the risk that it could have gone the other way and I'd have to go back to work...

Jack D
13th Apr 2018, 04:19
Most of that appreciation must have occurred prior to 2010 - I was there for a couple weeks in Sept. 2010 and the exchange rate then was pretty much one-to-one.
This is my retirement account - now that I'm retired I'm not inclined to gamble with it. That's why it's been in a stable value bond fund for the last 2 years - had I left it in stocks I could have nearly doubled my money, but run the risk that it could have gone the other way and I'd have to go back to work...

That’s sensible ...

ExXB
13th Apr 2018, 08:30
Horse meat is common in Switzerland. Often see it as a plat du jour at local restaurants and all supermarkets regularly stock it. If you don’t like Swiss meat prices, the French border and shops are not far away.

One hopes the CHF doesn’t continue to appreciate (or more correctly, other currencies don’t continue to depreciate).

RAT 5
13th Apr 2018, 08:55
There is an EU country where the government has affected -ve interest rates for a decade. In early 00's you could get 4% on € savings deposits. This was taxed at 30% = 1.2% of capital. They then changed the rules so that the capital was taxed at 1.2% not the interest. Saving's rates fell and but the 1.2% (now wealth tax) remained. By 2012 the € rate slipped below 1.2% creating an effective -ve interest rate for savings. The deposit rate is now 0.2% so the government is stealing 1% from your savings that was already taxed at a high rate when you earned it.
There are no barricades and burning tyres in the streets, no public on street protests. Apathy rules as the biggest party. if you thought the banks were robbing you blind how bad is it when the government does it so immorally.

Jack D
13th Apr 2018, 12:04
Horse meat is common in Switzerland. Often see it as a plat du jour at local restaurants and all supermarkets regularly stock it. If you don’t like Swiss meat prices, the French border and shops are not far away.

One hopes the CHF doesn’t continue to appreciate (or more correctly, other currencies don’t continue to depreciate).

Perhaps in the French speaking cantons that would make sense .. never noticed it ( horse meat ) in the German speaking part of the country

ExXB
13th Apr 2018, 13:10
Migros, the largest Swiss grocery store, markets it as “Horse Line” I’m certain it’s available throughout the country, not just the Swiss Romande.

Jack D
13th Apr 2018, 13:45
Migros, the largest Swiss grocery store, markets it as “Horse Line” I’m certain it’s available throughout the country, not just the Swiss Romande.

Could be .. I’ve lived there for 30 yrs and haven’t noticed it in the German speaking cantons , mind you I must admit I have never looked that hard !
I have seen it on a few menus in the Romande & Ticino though , I should give it a try ..
Fascinating drift, from negative interest rates to horse meat ..only on pprune

RAT 5
13th Apr 2018, 13:55
I'm at a loss; even for Prune. How does a thread about negative interest rates morph into the eating of horse meat and keep getting more fuel into that irrelevant topic?

Indeed JACK; You just beat me to it.

SARF
13th Apr 2018, 16:47
Negative interest rates and deflation are the precursor to eating sawdust and tree bark soup...Never mind red rum burgers

Gertrude the Wombat
13th Apr 2018, 17:28
..only on pprune
Nah, there were even thread drift competitions on obscure corners of usenet.

Jack D
13th Apr 2018, 17:48
Nah, there were even thread drift competitions on obscure corners of usenet.

This one should be a contender ! Thread drift competitions .. excellent idea

Chronus
13th Apr 2018, 18:41
Just received this from my IOM bank:

Negative Interest Rates - Euro Accounts

We will be introducing a negative interest rate for Euro current accounts with effect from 14 May 2018.

We regularly review client interest rates taking into consideration global financial markets and the economic environment. Unfortunately, we have been placed in this difficult position as a result of the continued market conditions surrounding the Euro currency, which are outside of our control.


What is changing?
• For balances of €100k and above - a negative interest charge of 0.60% will be applied quarterly to the full balance in your account. This will be calculated in the same way we calculate credit interest, and will be deducted from your balance and shown on your statement as ‘negative credit interest’.

• For balances below €100k - you will not be charged a negative rate and will continue to receive an interest rate of 0.00%.

No action is required

Is this widespread, or should I look for a new bank?

It is the last paragraph that is important, it means don`t for haevens sake draw it all out in cash, buy a spade, dig a hole under the dog kennel and bury it there.

racedo
13th Apr 2018, 21:52
I'm at a loss; even for Prune. How does a thread about negative interest rates morph into the eating of horse meat and keep getting more fuel into that irrelevant topic?

Indeed JACK; You just beat me to it.

Maybe because sometimes would be better off putting it on the nag in the 2.45 at Kempton than in the banks :E

radeng
14th Apr 2018, 09:11
One wonders how many people closing their accounts would it take to get a change? Presumably they feel that they have adequate liquidity at the moment, but were that to change very rapidly, I wonder how long they would last? The queues at Northern Rock come to mind....

Highway1
14th Apr 2018, 13:42
I wouldn't have thought hat there were that many with balances over 100k - isnt that above the statutory compensation limit?

racedo
14th Apr 2018, 14:41
The whole point of negative interest rates is to try and force people to take money from banks and spend / invest elsewhere because all the growth levers haven't worked.

Clop_Clop
15th Apr 2018, 07:33
By definition the best option has to be better than all other options, including the second best option. :)

With negative rates transferred onto accounts it looks the bank prefer you to transfer cash from that type of account into something else. Cash is their liability. Having cash there value is lost both through inflation and now a charge, `tax` as well from the bank ( charged 4 times a year) which is worse than all at once. The plot is indeed thickening...

They could be savings accounts or other type accounts as well? Getting a deposit box or changing banks is another option because it could be the composition of the banks balance sheet that led to this.

If determined sticking to cash one option is getting a satefy deposit box, but there is a costs associated so in effect the same as a tax. But if the savings from getting the box including all fees associated is greater than the cost of the negative rates charged by the bank then the definition holds and we can walk away reasonably confident to have done well. Someone mentioned gold also and historically been sort of a safe haven in times of market trouble. Same time you get no interest on gold and it`s traded in usd so a exchange thingie as well if the cash is in gbp or eur or whatever else initially and needs to be in gbp or whatever after...

Mr Optimistic
15th Apr 2018, 20:16
Ownership of gold can be banned by law. USA did it for long enough. Not only can you only trade on a risky black market if you want the cash, getting it wrong could put you in jail. Think it was up to 10 years in the US but don't know if anyone ever served it.

radeng
16th Apr 2018, 08:07
The dividend on Lloyds' shares this year was around 5% - admittedly, only 3p per share. BAE Systems shares have been running with a dividend of around 4% for the last 9 years....

Trouble is that shares can go t*ts up, an example being when GEC became Marconi and shares hit £13 before ending up at a few pence.

ExXB
16th Apr 2018, 09:10
The Swiss Central Banks negative rates was intended to drive down the value of the Swiss Franc vs the Euro. It had been approaching parity. It is mostly non-residents who are affected and they appear to be now seeking other safe havens. For our economy it is mostly a “very good thing”.

And getting back to horsemeat, I highly recommend it. Leaner than beef and very tasty.

Clop_Clop
16th Apr 2018, 16:15
Mr_Optimistic

Adds downside to marriages if the better half insisted on the gold and in any case only a tweet away isnt it :]