Negative interest rates on bank accounts are a thing of the past

In order to combat inflation, the European Central Bank (ECB) raises interest rates. Along with the growth of rates, negative interest rates, the actual fee for keeping money in bank accounts, are gradually becoming a thing of the past. Rabobank was the first major bank to drop negative rates.

Dutch banks are independent commercial organizations and do not pursue a single policy. Nevertheless, the practice of imposing negative interest on account balances was generally accepted. Only the size of negative interest varied from bank to bank. In some banks, they amounted to 0,01%, other financial institutions did not charge interest on amounts up to 100 euros. Rabobank has abolished the negative 000% rate on bank account balances exceeding EUR 0,5. ABN Amro cut the negative rate to 100%. Banks ING and Volksbank (SNS, ASN) will do so on 000 October. More about ING's plans in our article.

The practice of setting extremely low and even negative interest on account balances was used by the ECB to boost business activity, but it made it difficult for banks to attract assets to their accounts. Moreover, banks were forced to pay hundreds of millions of euros a year to the ECB for the money they held in their accounts. Naturally, this did not suit the financial and credit institutions. The head of Rabobank Wiebe Draijer said that he considers the existence of negative interest rates an undesirable phenomenon for bank customers and the economy as a whole. 

As numbers, 0,5% seems insignificant, but it is 250 euros per year if you have 150 euros in your account. The need to pay for the storage of savings when inflation is already reducing them is, to put it mildly, unpleasant. True, according to ABN Amro, negative rates do not apply to 000% of depositors - such account holders keep no more than 95 euros on them. However, about 100 account holders keep business funds of companies on them. Such accounts often have balances in excess of €000 and negative interest payments are detrimental to business. In ING Bank, the number of accounts with amounts over EUR 300 is between 000 and 100%. 

Under the accrual of negative interest fell not only wealthy people who really have large savings, and business, but also people of low income who temporarily kept large sums in their accounts - for example, proceeds from the sale of a house.

It should be noted that public wealth in the Netherlands is unevenly distributed. According to De Nederlandsche Bank, there were 412 billion euros in bank accounts in the country at the end of March, most of which was savings. The average savings per family was 50 euros, but most families had savings between 000 and 5 euros. 

Extremely low rates set by the ECB and negative interest charges prevented depositors from earning income on their accounts. Now that this state of affairs is changing, there is reason to hope that, over time, deposit rates will no longer be zero, and savings will again become profitable.