Ever since the European Central Bank went negative on interest rates, there has been a certain level of expectation that banks would pass on those negative interest rates to their customers. Well, that day has now arrived!
Commerzbank is the first major bank to make such a move. It says that it will encourage big clients to move cash into alternative investments while introducing fees on deposits.
And, while the banking giant says private savers and small and medium-sized businesses will not be affected by the policy, the shift in charging for holding deposits is a major one.
Drivers
In June the European Central Bank (ECB) said that banks would have to pay to park money at the central bank.
That negative interest rate was an effort to spur banks and other financial institutions to lend money and not leave it on deposit.
In September it made holding money at the ECB even less attractive by cutting the rate on overnight deposits to minus 0.2%.
Greater investment awareness
Moving forward, consumers in general, large and small will need to improve their general awareness of investing and investment markets if they are to escape the devastating impact of charges on deposits and financial repression in general.
“Savers everywhere have become a sort of ‘unwanted’ said Frank Conway of MoneyWhizz.org.
“Today, Irish banks are paying a pittance to savers and depositors. Additionally, they charge significant monthly fees on customer accounts where balances falls below certain thresholds” said Mr. Conway.
Consumers everywhere must now take a more proactive role in the management of their own personal wealth and long-term financial needs. This will include a high degree of personal learning or working with professional advisors to fill the gap.
Personal Finance 