Could your savings rate become negative? The This is Money podcast about the strange world of reverse rates
Savers are threatened with negative interest rates.
This week, a government bond auction saw British gilts sell for the first time at a negative rate, while Bank of England boss Andrew Bailey declined to rule out the base rate falling below zero.
But could you get a negative rate on your savings account?
On this week’s podcast, Simon Lambert, Lee Boyce and Georgie Frost look at the weird world of negative rates – an upside-down situation where investors actually pay to lend the government money, banks pay interest for depositing money with the Bank of England and you would be stabbed instead of rewarded for saving.
Not that there is a lot of reward for saving in many places now: A This is Money survey this week found that 235 savings accounts now pay 0.01 percent interest.
That’s saved 10 cents a year on £ 1,000 and some may prefer not to be offended that way and have their bank or construction association join the six bills where absolutely zero is paid.
The best accounts pay just over 1 percent, and while that’s not much, savers at least get a real return on their money, with inflation at 0.8 percent.
But there was another warning, and it is that the endgame of the transparent glass monetary policy could run up to inflation. The team looks at what the argument is and whether it is piling up.
The base rate is 0.1 percent (and could become negative) and bond yields are on the ground, due to the economic destruction of the corona virus crisis.
The leave arrangement is one of Chancellor Rishi Sunak’s flagship efforts to combat this, but another This is Money study this week revealed that companies that took advantage of the taxpayer’s offer to pay 80 percent of their employees’ wages, now they threaten to fire them.
And finally, if you feel brave, you might now decide it’s time to buy a house, while house prices and confidence have been dented, but may the real estate agent tell you what others have offered?
How to listen to the This is Money podcast
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