The Affect of Negative Interest Rates

Interest Rates for SureNegative interest rates are just a hypothetical in the U.S. right now, but it could be a reality in the future, especially if the economy keeps improving. Right now, those trying to save their money have a difficult time if they stay out of the stock market; banks pay next to nothing for savings account rates, usually around 0.04 to 0.05 percent interest per year. It could get worse, though, especially for those with smaller savings. It could get to the point where banks actually charge you an interest rate to hold your money for you with the purpose of trying to drive more money into alternative savings methods like CDs, money market accounts, mutual funds, and retirement accounts.

Who knows if this will ever happen here. It is worthy of consideration as the Fed has been open about the fact that it is ready to end the seven year stretch of interest rates near zero. Job growth has been great, and the economy is in one of the best states it has ever been in. It’s not likely to happen in the near future, but it is something that could be a possibility in the future.

If it does happen, the best course of action is to get your money out of your savings accounts and into something that will actually help you to grow your money. Savings are nice because they provide you with easy access to your cash, but there are better places to put it if this were to occur. Even if you are charged a fee, there are places that will charge smaller fees, or at least give you a chance to grow your money before charging you a fee.

One method to do this is with binary options. Yes, there will be a slight delay on getting access to your cash once you make a withdrawal, but the week or so that it will take to get a check or credit card deposit sent to you, but there is far more potential for growth here, especially in the light of an economy that is beginning to slow down in its growth. Binaries afford large rates of return, and there’s no impact upon this by changes in growth rates. You can make an 81 percent rate of return on a correct trade whether the asset’s price goes up $100 or $0.01.

Overseas, especially in parts of Europe, the lending crisis is growing, and economists within the U.S. are wary of this happening here, too. In the rare event that this does happen, you need to have a contingency plan in place. Whether you use binaries or something else is completely up to you, as long as it is profitable and worthwhile. The purpose of negative rates like this is to encourage more borrowing and keep the economy continuously moving forward, even when it seems like it can’t get any better. It is an artificial method at best, but it is showing signs of working in places like Switzerland, Sweden, and Denmark. The European Central Bank is also using it in limited amounts. Watching how the situation develops in Europe will help you to prepare even better if you are based in the U.S. and wish to grow your money faster. It’s an aggressive measure, but if it works, it is something that could be on the table. Part of your job as a short term trader is to keep track of events like this that could have an effect upon whether or not prices will change, and this is something that could easily impact prices across the board.