How are negative interest rates gonna work?? (paycheck, bank, corporation)

[munna21977]

There are different types of accounts-those who give Interest like Savings, CD and then we got Checking Accounts which gives No Interest. If Banks CD or Savings Account start charging Negative Interest Rates, how about moving money to Non-Interest paying Checking Account? Atleast deposit will be safe from negative interest rates.

[J.Thomas]

Originally Posted by HappyTexan

There is no borrowing at negative rates.

The negative rates will be reflected in your savings, checking, MM and CD.

The banks won't be paying you to borrow money.
The banks will be charging you to hold your money.

I still think there can be window for negativity in certain loans.

Not small but big ones like business loans...etc. over a million dollars for instance.

It can be

Banks can make very very little profit.

Cause they'll be getting fees from parked cash.

[snowtired14]

Maybe I'm not too bright, but exactly what does a negative interest rate mean? I understand it's a stimulus method to discourage money hoarding, but what does that mean to both borrowers and savers? For a borrower, does that mean a bank pays me to borrow? As a saver would that imply penalties for saving?

[mathjak107]

the banks and brokerages will charge you to baby sit your money , watch it and insure it . you can always build your own vault , or hire a guard 24/7 and insure it yourself .

but it would be a better deal to pay the bank or invest it in something else

[ncole1]

Originally Posted by snowtired14

Maybe I'm not too bright, but exactly what does a negative interest rate mean? I understand it's a stimulus method to discourage money hoarding, but what does that mean to both borrowers and savers? For a borrower, does that mean a bank pays me to borrow? As a saver would that imply penalties for saving?

Interest = money paid by someone who borrows money, paid to the lender as compensation for giving up the use of their money for a period of time.

Negative interest = money paid from the lender to the borrower.

Negative interest bank deposit account = account where you (or the depositor) pay for the bank to hold your money.

Negative interest loan = loan, with the total of all loan payments being *less* than the original loan amount.

[snowtired14]

Originally Posted by ncole1

Interest = money paid by someone who borrows money, paid to the lender as compensation for giving up the use of their money for a period of time.

Negative interest = money paid from the lender to the borrower.

Negative interest bank deposit account = account where you (or the depositor) pay for the bank to hold your money.

Negative interest loan = loan, with the total of all loan payments being *less* than the original loan amount.

So, if I understand, it will cost me money to put my money in the bank, better to keep it at home (just sayin'), so I have $100 to save

Then, I borrow money from the bank, let's say $100, but I only need to pay back $99 next month

Why not borrow $100 every month, pay back the $99 every month, pocket the $1, I'd be making 12% annual return, right?

[J.Thomas]

Paying banks to borrow money and forcing people to spend or invest in equities.

Basically propping up what they started in '08.

Of course it's not gonna work cause "trend exhaustion".

[tamajane]

Originally Posted by snowtired14

So, if I understand, it will cost me money to put my money in the bank, better to keep it at home (just sayin'), so I have $100 to save

Then, I borrow money from the bank, let's say $100, but I only need to pay back $99 next month

Why not borrow $100 every month, pay back the $99 every month, pocket the $1, I'd be making 12% annual return, right?

I think my head just exploded.

[ContrarianEcon]

Originally Posted by tamajane

I think my head just exploded.

You said it. Why not just increase the minimum wage and then things will cost more and you get your inflation? Much better than negative interest rates. But the FED sets the rates and is owned by the big banks, and congress sets the minimum wage. The FED can't fix this morbid economy, congress can.

[Mircea]

Originally Posted by ContrarianEcon

Why not just increase the minimum wage and then things will cost more and you get your inflation?

Wrong kind of Inflation.