Negative interest- Bank of England talking about it.

I remember mortgage rates at 3% and being impressed that a colleague, whose husband worked for a bank, git a reduced rate, 1.5% I think.

Cheques were chargeable and each cheque had a stamp embossed on it that cost money, even if the cheque wasn’t used. I think it was a type of tax

I was over the moon when I won £500, JenniferEccles. I’ve nowhere near the full allowance though.

My parents won £1000 back in the ‘70s, and they didn’t have that many. That must have been exciting.

I haven’t got the full £50,000 in Premium Bonds but I still win something most months.

Plus of course there is the excitement of possibly being one of the two winners of one million !

Come to that even £25,000 would cause great excitement!

this is worrying for people who only have their savings to live on, use up. cannot contemplate big spending as they have to eke out for the foreseeable, unknown future. what's the point of having lived frugally, if it's all downhill from here. never mind, could be worse.

Let’s drink to that, Trisher. :hic: ?

Spangler

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.

I had an inheritance 16 months ago and put £50K into premium bonds. Interest rate in savings was very low unless I put it away for 5+ years. Thought I'd try for a couple of years till some of the money is needed.
Won every month. Total winnings = £925

Now that's an idea SueDonim! If I invest my savings and borrow some more perhaps the bank will have to pay me!!!! I realy see my future in gin!!!

Trisher, maybe it would be better to invest in a gin distillery, then you can enjoy the fruits of your labour and get a return on your investment!

I've seen estimates that about a third of people have benefited financially from the Covid restrictions because they just haven't spent so much money.

Approximately the same number of people are financially worse off and that percentage is likely to increase over the next few months as furlough ends and the full effects of Brexit start. Unemployment is forecast to increase astronomically.

In other words, the wealth gap has widened.

The government has a problem because it's against raising taxes to achieve more equality. Negative interest rates force those with savings to spend the money and, therefore, create jobs for those who have lost them. It's trickle down economics.

Well, it's a theory.

So, do we all borrow £1,000,000 @ say, 2% and at the end of the year get £20,000?

Sadly, I don't think it works that way.

Another Premium Bond fan here, over the last three years I have made double the amount on my Bonds compared to savings bank account

Just imagine paying for everything in cash again at least you won’t have to worry about online scams.

I’ve come out in a cold sweat just imagining it. I don’t think I’ve enough hours in the day to hoick bags of cash round and queue at far flung offices, let alone enough speed to outrun the muggers.

We do okay out of our premium bonds. At least 2% return a year and it’s always a giddy moment when we ask Alexa if we’ve won. The return rate has been cut recently, but there’s always the prospect of a big win. Hope springs eternal.

I bought some National Savings bonds when Santander reduced the interest rates on their 123 account yet again, but within a week the NS bonds had gone from 1.4% or so down to less than 1%. If the government really wants us to buy them, they need to offer fixed rates, or do something to make them more attractive.

I also think that a lot of people are beginning to change- and realise that they just do not want to buy stuff they don't need anymore. People are starting to do exchanges, give stuff away they would have previousl thrown away. They realise the environmental issues linked to excessive consumption of textiles, electronics and gadgets of every kind - and they just don't want it anymore. Great, I say.

Also perhaps the Government does want us to switch from Banks to bonds to provide more cash into their system. I am tempted in a way, and yet on the other hand am loathed to lend my savings to a Government which is making such a mess of everything- selling us down the river, and paying huge sums of money to their mates- even those who fail again and again. As in today, more vast sums of monies given to 4 Ferry companies - after all the money given so far for sweet fa.

Grow stuff

I’m not sure that logic works, the only time I’ve experienced what you described is in the 1970s when interest rates were 12%+. At that time inflation was much higher and peaked at 25%, so it didn’t matter how much you borrowed you were on a winner.

Now we are in a period of low confidence, inflation is at 2% or so borrowing interest rates are higher, most of the population don’t have equity, their borrowings exceed savings. Although they may have pensions and other investments they are not available to “spend”. What is available they will hold on to until better times.

I should also add that funds can be rapidly withdrawn for emergencies.

Spangler

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.

I can assure you that you will get a regular return on a large investment in premium bonds. We regularly get wins of between £50 and £150 per month on our bonds. Better than any bank interest rate for the last two years.

the chancellor is borrowing truck loads of cash for Covid 19,

The chancellor hasn't 'borrowed' anything. It's all being done through direct financing by the Bank of England (otherwise popularly known as 'printing money) or bond purchasing by the BoE. In either case there is no-one to 'pay back'.

Message withdrawn at poster's request.

Maybe just spend it all on gin then you won't be bothered anyway!

The theory behind negative interest rates is to deter people from squirrelling money away and encourage them to spend it or invest in businesses. Both create jobs. In order to work, the interest rate has to be below the inflation rate. Otherwise, people would hang on to their money until prices drop. Negative interest rates also encourages people to work rather than relying on interest to live. Japan has had negative interest rates since 2016.

Well, that's the theory ...

It would be best to spend money then and invest in some way into the future. Buy things that increase in value, property may or may not. New furnishings etc. so don’t need to buy for some time!

I was just wondering whether you'd have to pay the Government if you won on the Premium Bonds if negative interest rates come in, Spangler

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.

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.