Economic “Apocalypse In Progress – A Negative Deposit Rate” Is Coming To A US Bank Near You
November 20th, 2013
“A Negative Deposit Rate” is coming to a US bank near you. One bank I do business with (a bank with a 5 Star rating), sent me a letter last year stating that any deposit money over $5 million will be hit with a negative rate. Banks can borrow from the Fed at .25%, so it’s not hard to see why they don’t want to pay us .5% on our savings. Meanwhile, the big banks lend that money out at 15% to 29%, in the form of credit cards and used car loans. Here’s a dose of reality from a TIME Magazine article:
“You might understandably assume that banks always take a more-the-merrier approach to customer deposits, and that therefore, they’d be happy that money held in commercial bank checking, savings, and money market accounts increased 10% over the past three months. But you’d be wrong, reports the Los Angeles Times.
Banks don’t exist simply to hold their customers’ money. Their purpose is to make money, and right now, as odd as it may seem, banks are implicitly sending the message that they’d prefer it if many customers would take their money elsewhere:
“Banks and credit unions are doing everything they can to get rid of the cash except make loans,” said Mike Moebs, a Lake Bluff, Ill., banking consultant.
He said banks are driving away deposits by refusing to renew CDs at higher rates and by imposing fees on checking accounts for depositors who don’t use other, profitable financial services as well.”