When the world goes negative
Discussion
Heard on R4 Today the concept of a bank charging you to look after your money (current account). In other words, you pay in £10 and get £9.50 back. This might seem to crackers to you and I, but the spokesman (presumably from the banking industry) said aha yes but if in the meantime the price of what you wanted to buy had fallen to £9.00 then you'd win.
Seems like the clever people are planning ahead... and I need to buy more mattresses.
Seems like the clever people are planning ahead... and I need to buy more mattresses.
Eric Mc said:
30 years ago banks normally charged for the service of providing personal current accounts. Possibly the biggest mistake ever made in banking was the move towards "free" banking.
Having never paid a bank bill for general use, i'm more than happy to keep "free banking".If someone wants to go over their overdraft limit and pay the bank £10 a day to subsidise me, that's up to them..
All of this reflects ongoing destruction of "the value of money" by the deadly combination of politicians and bankers.
One thing is always true of the greedy banker - however much money he's making he will always want more.
My fundamental objection to all of this is that within capitalism successful risk should be met with reward and failure should be met with loss. The banks have completely lost their grasp of this. When you deposit your money they do not keep it safe in a vault, they go out and risk it to make money for themselves. It is only fair that the depositor should have some benefit from the risk he has thus underwritten.
One thing is always true of the greedy banker - however much money he's making he will always want more.
My fundamental objection to all of this is that within capitalism successful risk should be met with reward and failure should be met with loss. The banks have completely lost their grasp of this. When you deposit your money they do not keep it safe in a vault, they go out and risk it to make money for themselves. It is only fair that the depositor should have some benefit from the risk he has thus underwritten.
rossub said:
Cant believe my bank still pays me £5 a month for using them. Most of my monthly salary disappears within the first few days via DDs as well.
Halifax? I get £5/month on mine too, and another £5/month on my credit card (which is clearer every month so any borrowing is free). £120/year, that's better than the interest I get on a proper savings account! 
chris7676 said:
Let's not confuse negative nominal interest rates with an account fee.
Exactly, 2 issues. Ive got bank accounts which are paid for, and ones which are free. Quite happy to pay £5/m if the service is good and the charges reasonable. The whole reason bank charges are so high is that the banks is looking for any opportunity to make money, due to the number of accounts they never make anything from. Something like 65% of accounts cost the banks money. Its an unsustainable model which probably wont be around in 20 years.
Deflation is another issue entirely, and not likely to happen while the US, EU and Japs keep pumping billions of dollars of paper money into the system.
Condi said:
chris7676 said:
Let's not confuse negative nominal interest rates with an account fee.
Exactly, 2 issues. Ive got bank accounts which are paid for, and ones which are free. Quite happy to pay £5/m if the service is good and the charges reasonable. The whole reason bank charges are so high is that the banks is looking for any opportunity to make money, due to the number of accounts they never make anything from. Something like 65% of accounts cost the banks money. Its an unsustainable model which probably wont be around in 20 years.
Deflation is another issue entirely, and not likely to happen while the US, EU and Japs keep pumping billions of dollars of paper money into the system.
I think the OP has misunderstood what the R4 program was saying. If interest rates go negative then the bank is being charged by the national bank (e.g. Bank of England) so why not pass this along to the consumer? When the bank gets paid, say 4%, by the BofE for putting your money in it you expect to be receive interest in your deposit account so why no the other way round? E.g. Swiss short term rates got 40 basis points below zero a little while ago, but everything they bought from Europe got 15% cheaper in a day so what's the problem?
Account fees and charges are an entirely separate issue.
NIRP is a very big problem and not understood at the retail level.
Try this and see if it concerns you:
http://ec.libsyn.com/p/8/8/b/88bbd199198b4e88/SM03...
Try this and see if it concerns you:
http://ec.libsyn.com/p/8/8/b/88bbd199198b4e88/SM03...
longone said:
NIRP is a very big problem and not understood at the retail level.
Try this and see if it concerns you:
http://ec.libsyn.com/p/8/8/b/88bbd199198b4e88/SM03...
OMG if anyone on earth can get to the end of that clip they need a medal!Try this and see if it concerns you:
http://ec.libsyn.com/p/8/8/b/88bbd199198b4e88/SM03...
Eric Mc said:
30 years ago banks normally charged for the service of providing personal current accounts. Possibly the biggest mistake ever made in banking was the move towards "free" banking.
Didn't you have to maintain a minimum balance of about £50 to get free banking? The practice ended not long before I got my first current account so I never experienced it personally, but I remember people talking about the "dead money" that they had to keep in the bank to avoid charges.Gassing Station | Finance | Top of Page | What's New | My Stuff