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Summary: Now you have to pay banks to use your money.
Bank of New York Mellon said Thursday that it will charge its customers a fee to hold cash deposits over $50 million. The bank said it has seen such a large increase in deposits over the last month that it will charge a 0.13 percent fee to clients with "extraordinary high deposit levels." Normally, banks pay interest to customers for deposits. But with short-term interest rates near zero, and increased FDIC insurance premiums on deposits, it hurts banks when they hold large amounts of cash on their balance sheets.
Edit: Now reflecting on the above it occurs to me that there is negative incentive to have enough cash on the balance sheets to cover any "calls" by customers or other situations requiring cash payout that might cause a bank to crash. That is a little strange.
DC
Bank of New York Mellon said Thursday that it will charge its customers a fee to hold cash deposits over $50 million. The bank said it has seen such a large increase in deposits over the last month that it will charge a 0.13 percent fee to clients with "extraordinary high deposit levels." Normally, banks pay interest to customers for deposits. But with short-term interest rates near zero, and increased FDIC insurance premiums on deposits, it hurts banks when they hold large amounts of cash on their balance sheets.
Edit: Now reflecting on the above it occurs to me that there is negative incentive to have enough cash on the balance sheets to cover any "calls" by customers or other situations requiring cash payout that might cause a bank to crash. That is a little strange.
DC