Zero or negative interest on savings accounts

More banks world wide are considering zero or negative interest on savings accounts following the coronavirus recession. Bitcoin and other digital asset could see an increase in investments.

I was reading an article on titled 80 Banks Charge Negative Interest Rates as Crisis Deepens in Germany and in a nutshell, what the headline is saying is that approximately 80 out of 800 banks are charging negative interest rates to large accounts and 16 of them also apply the negative rate policy to deposits below 100,000 Euros or $109,295.

Due to a court ruling in the summer of 2018, banks in Germany cannot apply the negative interest policy to existing customers but new customers will be affected.

Okay, I guess if you are already an existing customer you are safe from the negative interest policy. But for how long? Last year around early December I’ve received an e-mail from Lloyds Bank in which I was informed that the interest rate on my savings account are going down starting with February 2020. The interest rate was lowered from 0.20% to 0.10% and effective from the 17th of February 2020.

I was okay with it, I’m not expecting to get rich or live off from bank interest so I didn’t care too much. 2 months later after the interest rate on my account was lowered to 0.10% guess what, I receive another e-mail from Lloyds with more “great news”.

Following the Bank of England’s decision on 19 March 2020 to reduce the Bank Rate to 0.1%, we are lowering some of our savings interest rates on 14 July 2020.

Lloyds bank interest rate is going down from 0.20% to 0.10%
Lloyds bank interest rate is going down from 0.20% to 0.10%
Lloyds bank interest rate is going down from 0.10% to 0.01%
Lloyds bank interest rate is going down from 0.10% to 0.01%

As I was going through my news feed I came across this article published by The Times: Bank of England considering negative interest rates. The tittle is self explanatory and since Lloyds Bank complies with what the BoE decides, I am bit more careful when it comes to how much money I am comfortable holding in my bank account.

Am I safe from negative interest?

For now, yes. Any changes will always be announced in advance and that should give you time to make the decision of either accepting being charged negative interest or do something else with your money.

I think I’ve made a wise decision in October 2019 when I’ve started investing on eToro as well as exploring the crypto market a bit more. I think that the likes of Bitcoin and other digital assets will attract a small fraction of bank customers which are now uncertain in regards to what they could be charged just for parking their money in a bank account.

George Cristea-Matei

Following different paths towards the road to self-discovery. Always hungry for knowledge and horizon expansion. Tech enthusiast & part-time trader on @eToro .

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