Negative interest rates have become a reality at the European Central Bank and Bank of Japan. Those negative rates have spurred a debate about the practical and theoretical impact of taking rates negative.
PNC Bank chairman and CEO Bill Demchak believes a similar move by the US Federal Reserve would have a big impact on US bank customers.
“If rates go negative, consumer deposit rates go to zero and PNC would charge fees on accounts.” Demchak said while addressing analysts at Deutsche Bank last week.
That means customers who hold accounts at the bank would have to pay PNC a fee to hold the money in the bank instead of vice versa.
Right now customers with a PNC savings account with under $2,500 earn 0.01% interest per month. If they have a PNC checking account they earn 0.05%, according to the company’s website.
A standard savings accounts with over $2,500 earns 0.10% interest when combined with a PNC checking account.
Fees are pretty minimal at PNC for the moment. Customers who keep less than $300 in average monthly assets are charged $5 a month. If they cross above that threshold the fee is waived.
When questioned earlier in the month about negative interest rates, Federal Reserve Chair Janet Yellen said her agency was extensively investigating the negative impact such a rate would have.
For now the Federal Reserve seems intent on raising interest rates, which should keep us out of negative rate territory for the short-term.