In crime people steal from banks, but in Europe the banks steal from you
Besides the Damocles Sword of a bail-in that hangs over every depositor’s account in the Western banking system, there is a new threat that has emerged over the past two years that is now engulfing nearly every European institution that deals in banking.
Negative Interest Rates.
And as of Aug. 30 there are now 19 European countries who’s 2-year bonds return a negative yield, and in which some of these countries are also imposing negative interest onto their own depositors simply for holding their cash in these banks.
The varied impacts of the European interest rates cuts are beginning to work their way through the system. In two different currencies, and thus two different monetary regimes, we now have banks charging large depositors for holding their deposits. ¬†–¬†Forbes
Yet even for small depositors, rates that don’t fall into the negative category can still be costly for customers. ¬†Take into consideration a scenario that is now commonplace with Bank of America.
Here‚Äôs one of the things that caught my eye: Bank of America has $592.4 billion in deposits from retail customers, i.e. regular folks who bank at BOA.
And according to its annual report, BOA paid its retail depositors an average interest rate of 0.04% last year.
Seriously. That‚Äôs a tiny, laughable amount of interest. But hey, at least it‚Äôs positive.
That 0.04% average rate means the bank paid its retail depositors a total of $236 million in interest.
Yet at the same time, Bank of America charged those very same retail depositors $4.1 BILLION in fees.
So in total, small depositors forked over a net sum of $3.8+ billion to Bank of America last year for the privilege of holding their money at the bank.
Based on the bank‚Äôs total consumer deposits of $592.4 billion, it‚Äôs as if the bank had charged its customers a¬†negative¬†interest rate of 0.64%. –¬†The Sovereign Man
The bottom line is that outside of some day to day banking functions such as direct deposit, check use, and bill pay for individuals and small businesses, keeping your wealth in a bank is a losing proposition. ¬†And with some many options out there like cryptocurrencies, gold and silver, and alternative private accounts to hold the bulk of your parked wealth, there really is no reason at all to trust your money with an institution that can slowly or quickly, siphon it from you.
Kenneth Schortgen Jr¬†is¬†a writer for¬†The Daily Economist,¬†Secretsofthefed.com,¬†Roguemoney.net, and¬†Viral Liberty, and hosts¬†the popular¬†youtube podcast¬†on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.