Negative interest rates and us plebs?

[GoSeigen]

I see a real disadvantage to be a "first mover" to negative interest rates on retail accounts. From a brand perspective, might even be better to sell that part of the business than get covered in the ensuing muck such a move would let fly!

VRD

There's some wishful thinking in this thread. Since the banks are already considered sh^t by all and sundry I don't think they will consider that a bit more of the same makes any difference.

As for first mover, Deutsche have already made clear that they wish to "broaden the number of [retail] customers that are charged fees for deposits", so other banks will simply be following their lead.

GS

[vrdiver]

There's some wishful thinking in this thread.

Perhaps, but not just in this thread or even this forum.

Money supply growth is going through the roof in the UK, USA, EU and Japan and some investors are now starting to ponder the return of inflation, especially as central banks declare they are willing to let inflation overshoot to compensate for prior periods of undershoot, relative to their 2% targets

https://www.youinvest.co.uk/articles/investmentarticles/218113/market-trends-after-one-year-covid-are-clear-pfizer-monday

VRD

[absolutezero]

All it will take is one bank to pay you 0.01% interest and then most people with any sense will flock there, forcing the others to either not charge a negative rate or lose custom (deposits).

[jonesa1]

All it will take is one bank to pay you 0.01% interest and then most people with any sense will flock there, forcing the others to either not charge a negative rate or lose custom (deposits).

It could be that basic / free accounts will start to become more restricted, with increased charges for additional services, in parallel with paid-for accounts (from the same bank) which bundle other services (such as Natiowide's FlexPlus). Attracting customers without being able to drive a profit from them is only going to be a short term strategy and likely to unwind fairly quickly.

[hiriskpaul]

I think it unlikely that banks will hit retail holders with negative interest rates. It is too easy for people to withdraw cash should that happen. More likely they will increase fees. Increasing fees on retailers for debit card transactions and for paying cash into banks are obvious charges that could go up. AFAIK There are no free business accounts any more, except for the first year. These business account charges could rise. Use your debit/credit card abroad? Expect that to cost more and no foreign fee cards will likely disappear, be restricted, or become fee paying. I am getting 0.5% cashback on my Barclaycard (used to be 1%). I doubt that will last much longer. There are a lot of niggling ways that banks can extract money from us without resorting to negative interest.