Negative interest rates and what it means

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February 16th, 2016 at 8:07:12 AM permalink
RedNeckerson
Member since: Oct 24, 2012
Threads: 5
Posts: 32
This has been a very interesting and informative thread. I pay everything online and many bills are automatic. Although I do get electronic bills every month, even on the auto pays.
I use Discover for the auto pays because of the cash back. I'm a deadbeat though I guess, because I rarely carry a balance.

My mortgage is paid off today. But I never understood, when I had a mortgage payment, why they wouldn't let me pay it with a credit card. They accepted a debit card or withdrawal from any bank account but not a credit card. Why is this?
February 16th, 2016 at 8:13:20 AM permalink
odiousgambit
Member since: Oct 28, 2012
Threads: 82
Posts: 1893
Quote: RedNeckerson
I never understood, when I had a mortgage payment, why they wouldn't let me pay it with a credit card. They accepted a debit card or withdrawal from any bank account but not a credit card. Why is this?


Because they do not get the full amount. Somebody has to pay the first month's interest.
Mustard:You like Kipling, Miss Scarlet? Sure, I'll eat anything [from movie]
February 16th, 2016 at 8:25:59 AM permalink
Pacomartin
Member since: Oct 24, 2012
Threads: 761
Posts: 9015
Quote: RedNeckerson
But I never understood, when I had a mortgage payment, why they wouldn't let me pay it with a credit card. They accepted a debit card or withdrawal from any bank account but not a credit card. Why is this?


Credit cards cost a fee. If you owed a bank $1000 and they took a credit card, they would have to pay a $20-$40 swipe fee, just like a store. Merchants pay the swipe fee because they feel they get more sales, although they often require a minimum level of purchase to take a cc.
February 16th, 2016 at 8:39:11 AM permalink
TheCesspit
Member since: Oct 24, 2012
Threads: 23
Posts: 1929
Quote: Pacomartin
Credit cards cost a fee. If you owed a bank $1000 and they took a credit card, they would have to pay a $20-$40 swipe fee, just like a store. Merchants pay the swipe fee because they feel they get more sales, although they often require a minimum level of purchase to take a cc.


For my own business, I charge a 3% credit card fee because of the costs to me as the merchant. No-one seems to mind much. Much prefer cash or cheque, even though I have bank charges for them, it's much less.
It is said that your life flashes before your eyes just before you die.... it's called Life
February 16th, 2016 at 11:23:10 AM permalink
odiousgambit
Member since: Oct 28, 2012
Threads: 82
Posts: 1893
Quote: Pacomartin
... they often require a minimum level of purchase to take a cc.

This used to be a violation of merchant's credit card agreement, changed in 2010 to allow $10 as a minimum. See strike-out [I did strike-out]

Quote: TheCesspit
For my own business, I charge a 3% credit card fee because of the costs to me as the merchant.

This is a violation of a merchant's agreement, if I understand it correctly, involves whether it is or not a service that is a "merchant's normal business practice"

Quote: link
Credit card practices that aren't allowed

Advance deposit: If a customer is billed for an advance deposit, that amount must be applied toward the balance of the purchase. The merchant cannot charge the deposit plus the full purchase price.
Blank sales drafts: Merchants cannot have cardholders sign a blank sales draft before the final transaction amount is known.
Cash: Cash disbursement from credit cards is prohibited by merchants and should only be handled by financial institutions.
Cash-only refunds: If refunds are accepted, they must be made to the card used for the original purchase or, if posted, as an in-store credit or exchange. Merchants doing otherwise are in violation. Also, return policies must be disclosed to the cardholder at the time of the credit card transaction.
Credit card options: A vendor cannot choose your payment option. If a vendor accepts various payment options, the payment choice remains at the customer's discretion.
Delinquency: The merchant cannot bill the cardholder's credit card account for a delinquent account or for the collection of a dishonored check.
Discrimination: If a merchant accepts a card, that merchant cannot discriminate from whom it accepts the card -- when properly presented -- as payment.
ID: Merchants may ask for additional ID, but this cannot be a condition of acceptance.
Personal ID: Several states prohibit merchants writing cardholder personal information on a sales receipt.
Purchase amounts: Merchants cannot impose minimum or maximum purchase amounts for credit card transactions.
Surcharges: Merchants are prohibited from adding fees on to credit card purchases.
Taxes: Merchants cannot collect sales tax separately as cash; it must be included in the purchase price.
Zero-percent tip: Merchants are not allowed to include an estimated tip in the authorization amount secured from the merchant bank. Taxicabs, limousines, bars taverns, beauty salons, barbershops, health and beauty spas, and restaurant authorizations are automatically assessed a 20 percent additional authorization amount to cover the expected tip.



[edit]

>>>

that are allowed:


Convenience fees: Convenience fees can be imposed by merchants who provide alternate payment services -- such as shops that offer utility payment services -- and can be added to the transaction amount. The transaction must be a legitimate, alternate payment channel outside of the merchant's normal business practice, the fee must be disclosed to the customer and the customer must have the opportunity to decline the transaction.
Delayed delivery: When purchasing an item or service to be delivered at a future date, the vendor can process two transactions -- a deposit and the balance amount; however, the vendor must obtain two separate authorizations for both dates and both amounts and can only submit the balance amount upon the actual delivery of the item or service.
Discount for cash transaction: Merchants can offer this discount as long as the information is clearly disclosed to customers and the cash price is presented as a discount from the standard price charged for all other forms of payment.
Mail order: Mail order merchants must send the store's refund and credit policies to the customer for signature and return before completing the sale. The document can be sent by e-mail, fax, or mail. Acceptance can be accomplished on the Internet via an agree/accept function where the customer reads a terms and conditions form and checks the "agree" box before ordering any products or services.
Partial authorization: Authorizing a portion of a sale to guarantee a portion of the purchase amount is at the discretion of the merchant and the customer.
Refund/exchange policies: If not processing refunds to credit cards, vendors must clearly post if credit card returns will be made via exchange or in-store credit or if returns are simply not accepted.
Split-tender: Acceptance of a split-tender (accepting multiple payment forms) occurs at a merchant's discretion.

http://www.creditcards.com/credit-card-news/merchants-who-violate-credit-card-terms-1275.php
Mustard:You like Kipling, Miss Scarlet? Sure, I'll eat anything [from movie]
February 16th, 2016 at 1:34:04 PM permalink
TheCesspit
Member since: Oct 24, 2012
Threads: 23
Posts: 1929
These charges don't appear to be in my agreement I have, but that's a good point that I'll look out for.
It is said that your life flashes before your eyes just before you die.... it's called Life
February 16th, 2016 at 1:40:12 PM permalink
Nareed
Member since: Oct 24, 2012
Threads: 332
Posts: 11949
Quote: TheCesspit
These charges don't appear to be in my agreement I have, but that's a good point that I'll look out for.


You can always just offer a discount for cash payments.
If Trump where half as smart as he thinks he is, he'd be twice as smart as he really is.
February 17th, 2016 at 6:46:13 AM permalink
AcesAndEights
Member since: Oct 24, 2012
Threads: 5
Posts: 238
Quote: AZDuffman
Will your local bank eat this? Not likely! Sooner or later you will get charged for letting money sit in your account. The US Fed is eyeing this idea, thought we are not there yet. Prepare yourselves, if we are at the point where people will not borrow even at ultra-low rates we are seeing the end of the old system.

Personally I don't think this will ever happen for consumer accounts.

My online savings account with Barclays is still paying 1% interest. When I opened it a couple of years ago it was 0.95%; it has increased to 1% and has remained steady there ever since.

My local checking account earns me 0% interest but has no no fees or minimums or anything. Negative interest is really just a monthly fee based on your account balance. If they started charging negative interest, I would just start keeping the majority of my liquid cash as just that: cash in my safe.
"You think I'm joking." -EvenBob
February 17th, 2016 at 7:29:00 AM permalink
odiousgambit
Member since: Oct 28, 2012
Threads: 82
Posts: 1893
Some big corporate accounts have to pay fees, unprotected by the size of the money involved. But apparently they expect to be able to draw this money out on short notice - thus the banks can't really use that money.
Mustard:You like Kipling, Miss Scarlet? Sure, I'll eat anything [from movie]
February 17th, 2016 at 7:32:27 AM permalink
Pacomartin
Member since: Oct 24, 2012
Threads: 761
Posts: 9015
Quote: AcesAndEights
Personally I don't think this will ever happen for consumer accounts.


It's highly unlikely that a bank will advertise negative interest rates. It will probably come in the form of surcharges and fees.

By the end of 2014 , banks in USA are holding $278.88 per capita . Obviously, it would be difficult for large numbers of people to turn their bank accounts into cash quickly.

Sweden's Riksbank - the world's oldest central bank - became the first major monetary authority to cross the rubicon and take its main policy rate into the red in February 2015. The introduction of sub-zero rates caused no immediate panic that central bankers were "losing control". Neither did they seem to produce deleterious economic effects in their host countries, as savers continued to keep their money deposited in banks rather than fleeing for the safety of cash. Commercial lenders, meanwhile, adjusted their business models to help maintain profitability.



But Swedish Banks are only holding 370SEK =$43.50 per capita in 2014, down from 927SEK per capita in 2010. As most Swedish banks do not have cash transactions at the teller, nor do their ATMs accept cash deposits. In the event of a run on the banks, they can simply reduce the daily limit from their ATMs. Sweden also has only about 3000 ATMs for a country of almost 10 million.

Images of children in Germany in the 1920's playing with blocks of cash are impossible today.
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