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Negative interest- Bank of England talking about it.

(48 Posts)
trisher Mon 12-Oct-20 10:15:02

How do you feel about negative interest and how do you think it will impact on older people who tend to be the savers. Must admit I had never heard of it but it seems that it is on the cards. Will some people start to keep their money under the mattress? Apparently itis more to deal wit commercial banks and transferring money, but I think it could change things here. Although apparently Sweden has had it for ages and most EU countries for 6 years.
(if you don't know and I didn't you get charged interest on savings and paid interest on loans!)

Smileless2012 Mon 12-Oct-20 10:33:37

Never heard of itshock. Do you mean that we could be charged by the bank for example, depending on how much money we have in our account?

GrannyGravy13 Mon 12-Oct-20 10:35:29

Going to need a bigger safe 💷💷

Calendargirl Mon 12-Oct-20 10:40:21

you get charged interest on savings and paid interest on loans

😳

Callistemon Mon 12-Oct-20 10:42:36

Could I be paid for taking out a loan to buy a new car? Now, what to choose. 🚘

In fact, I would have thought that paying even a low interest rate on savings would be in the Government's best interests - I'm surprised they haven't encouraged people to invest in more Government schemes at the moment. I thought they would want to borrow from the people who do have savings because they have not been spending on holidays etc.

trisher Mon 12-Oct-20 10:54:50

Apparently according to Radio 4 it is more to do with commercial banks moving large sums of money and getting interest on it. But basically yes if you have savings you will be charged if you take out a loan it will pay interest. (It's Alice again!)

Oldwoman70 Mon 12-Oct-20 11:12:43

I think I may be psychic!! Only last week I joked with a friend that pretty soon banks will be charging us to hold our money

Esspee Mon 12-Oct-20 11:24:40

I refuse to pay anybody for them to hold my money and lend it out to make a profit for themselves. I’ll simply move my meagre savings somewhere that won’t charge me interest.
It’s a matter of principle.

EllanVannin Mon 12-Oct-20 11:47:49

I had a letter from my bank on Friday telling me that interest rates will be 0.02% and 0.05% respectively on amounts up to £30,000 and from £30,000. This is from November and on an ISA.

Nothing about charging me but an option to close the account for free if I wished to do so----and go along with a wheelbarrow to collect my savings grin

Callistemon Mon 12-Oct-20 11:50:14

(It's Alice again!)

I think we're all down a rabbit hole.

Greyduster Mon 12-Oct-20 12:28:04

One could almost be tempted to take the whole lot out and buy gold. But I would have to bury it in the garden and my memory is shocking these days so I’d probably never find it again! Seriously, though, the whole banking thing is becoming a bad joke!

biba70 Mon 12-Oct-20 17:23:35

Negative interests have been charged in Switzerland for a long time. But this is in exchange for having a vers strong, sure and safe currency- not a tanking Pound!

trisher Mon 12-Oct-20 18:07:37

That's interesting biba70. I'd never heard of negative interest until this morning. I know I'm not the best as far as finance goes but I'm not completely ignorant. Do you think it works?

JenniferEccles Mon 12-Oct-20 19:18:02

Interest rates on savings have been dire for ages with building societies and banks chipping away at the already meagre rates paid.

Maybe now is the time to look for fixed rate deals on bonds and ISAs. We can get better rates if we are prepared to tie our money up for a few years.

I don’t think things are going to improve anytime soon.

It’s a sorry situation when even 1.4% looks like a good deal.

Just imagine if interest rates now were what they were when we were young and paying mortgages, 17% if I remember correctly.

The older generation then would have been quids in!

EllanVannin Mon 12-Oct-20 19:21:27

I remember getting a healthy 13% in the 80's. I knew it was too good to last, but I had a good run for my money back then which is why I did a few long-hauls before the dream ended.

MerylStreep Mon 12-Oct-20 19:29:36

All the mattresses are full 😱 I think the floorboards are going to have to come up.
We lived on our interest from 2004 - 2008. We all know what happened then.

biba70 Mon 12-Oct-20 19:34:00

trisher- I am not sure. I believe negative interest is only charged on large fortunes, not 'everyday little savers' like us (well we are not saving anything at the mo ;) ).

biba70 Mon 12-Oct-20 19:39:38

As said above, the reason for negative rates in Switzerland is because the currency is strong and safe - one could say, last refuge for all scoundrels. What seems bizarre now, is to hear about it about Sterling, which is very weak and bordering on tanking- which will happen if No Deal.

www.swissinfo.ch/eng/bank-savers-feel-sting-from-negative-interest-rates/45424320

welbeck Mon 12-Oct-20 23:48:42

martin lewis was talking about this on radio fivelive today about 12.30pm. monday.
he said the bankof england has contacted all the high street banks to advise them to have procedures in place in case negative interest becomes a reality.
he said that does not mean it will happen.
but obviously it's nearer than at beginning of year.
he said it would affect all savers, probably by making their accounts into the type where you have to pay the bank an annual fee. that would be the simplest way for them to do it.
he said people should still keep their money in banks, because it is safer, with up to 85K guaranteed by govt.
whereas if a burglar goes for the stuffed mattress, the most any house insurance would pay is 1K for cash.

Spangler Tue 13-Oct-20 07:16:40

You can always put up to £50K into Premium Bonds. You are unlikely to win anything but at least you get to keep your stake and you won't be charged anything.

Calendargirl Tue 13-Oct-20 07:22:11

Unless things have changed, DD in Australia already pays for many bank services that we get for free, i.e. direct debits, money paid in, etc.

Maggiemaybe Tue 13-Oct-20 07:42:38

We used to pay bank charges in the early 70s, if my memory serves me correctly. Wasn’t there a charge for each cheque written? I’m sure the big incentive for opening the student account my grant was paid into was simply lower charges.

Calendargirl Tue 13-Oct-20 07:52:08

Cheques themselves cost money in the good old days. I think a new cheque book was 5/-(shillings) back in the late 60’s, early 70’s, think it was a type of tax or something similar.

Davidhs Tue 13-Oct-20 09:19:42

The reply to negative interest rates is a run on the banks, if everyone asked for cash that would cause them and the BOE big problems. I have no sympathy for banks, they pay us peanuts, lend it out and make big profits
Just imagine paying for everything in cash again at least you won’t have to worry about online scams.
Not really practical at present though.

Davidhs Tue 13-Oct-20 09:53:18

Sterling value has been bumping along the bottom for many months, the chancellor is borrowing truck loads of cash for Covid 19, why would lenders do that?.

Because the currency will recover, they will make nice gains, it might not be next year though, the interest rate is not important if the exchange rate rises. Covid is masking whatever effect Brexit might have, the currency markets have already factored in the risks and I am not expecting Sterling to fall further.