In the investment area, the horror version of negative interest rates is spreading to more and more investors. Due to the fact that the European Central Bank has reduced the key interest rates to exactly zero percent meanwhile, some banks are already beginning to demand punitive interest in the form of negative interest rates from their major customers for higher account balances.
What may become a kind of nightmare for investors, on the other hand, could of course lead to loan seekers that the banks may also rate there in the future, low interest rates. In fact, there is already an offer on the market from a well-known furniture retailer, which includes negative interest rates in the lending sector.
Pay installments and receive interest?
For many years, many German citizens have known that they have to pay interest on borrowing when they take out a loan or when they agree to installment payments. Now, however, there is the offer of a well-known furniture retailer, which provides quite offensive a so-called negative interest financing.
In concrete terms, this means that the customer must make a payment installment agreement with the dealer paying an interest rate of -1.0 percent, which in effect will receive interest at the rate of 1.0 percent. However, what initially looks like a low interest rate is in practice nothing more than a typical zero-percent financing, which is provided with a price discount of one percent.
This becomes clear when you take a closer look at the financial construction
In fact, when it comes to the credit of interest, in effect, the targeted percent, this is not from the lending bank, but instead the percent is paid in retrospect by the furniture retailer.
Ultimately, the negative interest financing is more about clever marketing, because ultimately there is a typical and in the past often criticized zero-percent financing behind.
Even though the furniture retailer’s offer is not really a loan agreement with negative interest rates, many consumers are still wondering if there can be “real” credit offers with negative interest rates in the near future.
Negative interest rates in the credit sector become reality in the future?
Experts, however, assume that it is relatively unlikely that larger banks are actually not only lending for free, but also credit the customer interest.
This is supported, for example, by the fact that interest surpluses are one of the banks’ most important sources of income. However, if banks were to pay interest to the client not only for investments but also for loans, interest as a source of revenue would be almost completely eliminated. Therefore, even loan seekers should not necessarily hope for future lending rates on lending, but instead compare offers and, for example, conclude loans at lower interest rates of four or less percent.