Which of the following best describes a negative interest rate policy?

 

Which of the following best describes a negative interest rate policy?

A) When banks double the interest on savings accounts
B) When interest rates are fixed and never change
C) When banks charge customers to keep money in their accounts
D) When customers receive interest only after 5 years

✅ Correct Answer: C) When banks charge customers to keep money in their accounts

https://www.profitableratecpm.com/y117b978iq?key=ee297cff4938ab6d0eb328fbeea80ac9

Why it happens:

Central banks (like the European Central Bank or Bank of Japan) sometimes set interest rates below zero to:

• Encourage spending and investment

• Avoid economic stagnation or deflation

• Discourage hoarding of cash

📍 Countries where this has happened:

• Japan

• Switzerland

• Denmark

• Sweden

• European Central Bank (for the Eurozone)

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🧠 Why it's surprising:

Most people think a savings account earns interest. But in negative-rate economies, banks may deduct a small percentage of your balance instead—especially for large deposits or corporate accounts.