Bank of Mattress

 

It isn’t something we have ever really contemplated seriously in this country, but there is the real possibility that we may have to pay banks for having money with them if interest rates turn negative.

 

With the base rate currently at 0.5% and many bank savings rates around this level, any downward movement by the Bank of England could see savings rates turn negative. Or to put that another way……how would you feel about paying the bank 0.5% - 1.0% each year to look after your money?

 

There is no doubt that many savers would struggle to get their head around this but that is a real possibility. So much so, that Nawest have already written to business customers to confirm that the bank has a clear intention to force account holders to pay to hold money with them if interest rates are reduced / negative.

 

And this isn’t unique to the UK……Denmark, Sweden, Switzerland and Japan have had negative interest rates for some time.

 

However, a move to negative interest rates in the UK would turn a key part of banking on its head, with banks effectively being paid to store people’s money. In effect, savers would be penalised for keeping money in bank accounts rather than under the mattress.

 

The Bank of Mattress could become very popular again!