What to do if negative interest rates - Bank of England?

[ChocoTrio]

We’re looking at negative interest rates, Bank of England’s Andy Haldane says

If this happens, then what happens to any savings? Or what is the best way to protect any savings?

It looks like negative interest rates come with a lot of problems, so it's possible it won't happen. However, in the event that it does - what is a good way of preparing?

Buy a safe and keep all your money at home!!
Will the banks charge you to keep your money if there are -ve interest rates?

I really do not know enough about negative interests to comment - hence why I'm asking.

It looks like it is considering it (apparently the countries including the Central European banks already have negative interest rates).

BOE Debate About Negative Interest Rates Is Stepping Up a Gear

I'd look for a fixed rate ISA account now.

It’s an interesting one, normally the idea is to stimulate the market by encouraging spending. But I just feel after the current situation, we all need to be better at saving for a rainy day. Not encouraging us all to utilise our savings and hope these grim times never return?!

And yes negative interest rates on an account would mean that your savings reduced by that % each month. Although just because BOE rate is set at a level doesn't mean all acounts will have the same rate they don't now.

Any IFA would say you need some money in cash but you could also consider a stocks and shares ISA if you are saving for the longer term.

Negative interest rates is a terrible idea that will create more panic as if people haven't have enough panic in recent times already!

The issue with stocks is that the market crashed and the last time I looked it still looks unstable.

"There are so many problems with negative interest rates that it’s hard to know where to start. It’s terrible for the banking sector, for a start, and given that it’s hard to have a healthy economy without a healthy banking sector (banks are still the main mechanism by which central bank policy is transmitted to the rest of us, after all), that’s not a great idea.
But there’s a much bigger risk here too – and that’s trust. Money is a social technology. It’s a set of rules that we all broadly agree on. It’s easy to forget that there is nothing inevitable about these systems, but the fact that every paper currency in history has eventually foundered – along with the systems they were part of – is clear evidence that this stuff only works by consent."

Why negative interest rates are a terrible idea

I'm not convinced that the sterling can actually risk negative interest rates, especially with Brexit looming.

I don't disagree with you @ChocoTrio particularly as I am a saver...one benefit of lockdown is that I am saving even more not having to pay to commute or go out.

If it happens reports suggest BoE will decide by December time. It's a big decision - and they would need to think it through carefully. December has been suggested because of Brexit. Although, I would have thought increasing interest rates would have been a better bet to safeguard the sterling.

In the meantime, with the value of gold increasing, I better start browsing for some solid gold shoes or something crazy like that lol

Flight to gold is traditional in uncertain times :-)

And yet Gordon Brown sold our reserves, right? Or have they been replenished since?

I understand it's not as big an issue because the sterling isn't backed by gold. But still. It's gold. Gold doesn't turn to rust...

I don't know how much gold the country has but doubt very much its been replenished in times of austerity.

Is it called a Depression when the interest rate is negative? It is called a Recession when interest rate is low.

@Wauden apparently other countries have had negative interest rates since 2014/2015 - and that wasn't a depression.

Google find:

The 5 Countries With the Lowest Interest Rates
Switzerland. The Swiss National Bank reported an unchanged benchmark of a three-month Libor of -0.75%. ...
Denmark. The primary interest rate in Denmark is the certificates of deposit rate set by the Central Bank of Denmark. ...
Japan. The Bank of Japan reported an unchanged interest rate of -0.1%. ...
Sweden. ...
Spain.

www.investopedia.com/articles/personal-finance/051415/5-countries-lowest-interest-rates.asp

If the central bank has negative rates it doesn’t mean that savings accounts will. You are worrying about this unnecessarily.

The Central Bank of Europe has had a negative rate since 2014 (see here and it hasn't meant that every bank in the Eurozone has had negative rates.

They can't take your money from you in an ordinary savings account. The worse that will happen is they won't add any interest on.