Another challenge on the horizon: negative interest rates

We often hear that the low interest rate environment has made profitability particularly challenging for the banks - and for challenger banks in particular. The introduction of negative interest rates feels like it could be even more challenging

I’ve seen exactly zero of the interest decreases passed on to me by my credit card companies. I suspect this will be no different. Savings providers meanwhile…

Virtually guaranteed the increases will be passed on when the rates start going back up however.

All this means to me now is almost all of my money will go into my stocks and shares now, and perhaps spoil myself a little more on expensive nice things that I’ve decided against buying in favour of increasing my cash reserves.

Emergency fund be dammed.


This is just the Bank making sure that is has the flexibility to go negative if it wants - it’s not forward guidance.

I suppose negative rates would be difficult for anyone generating revenue from interest held at the central bank. The bigger problem with challengers is the path to profitability - the stats from Monzo paid accounts are looking good, so hopefully they are on the right track and that the cost of interest doesn’t wipe that out.

More broadly, I think I’ve heard the big banks say that negative interest rates might kill free banking. That might actually be a bonus for the neobanks as they can operate accounts for single digit £s a month, whereas the others have bigger overheads. If Monzling have to compete on price, then I think they will do very well…


sounds like a cute bird


The murmurations are in hot coral.


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