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What are Negative Interest Rates ?

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Danielle
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Negative interest rates involve depositing money that attracts a charge rather than earning interest. In this case, the negative rate is applied when commercial banks deposit with the US central bank.

The idea behind this are the banks will not deposit any more than is necessary with the US central bank and instead will lend the money, or invest in more profitable business activities with a higher return.

What does this mean for bank customers? It depends on the bank. It might lower or charge its own negative interest rates, keep them the same and eat the loss, or charge interest indirectly through higher deposit fees.


Read more: http://www.smh.com.au/business/markets/just-what-are-negative-interest-rates-20140606-39n6d.html#ixzz33rSouCGC


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