Swiss banks are going to start charging their millionaire customers to store money, according to a report by CNN.
On Friday (Oct. 18), the bank Credit Suisse said it was going to tack on a negative 0.75 percent interest rate for customers who have more than $2 million in the bank. For example, if a customer has a balance of $3 million for a year, that customer would get charged $7,600.
If a balance is above $10.1 million, the fee goes up to 0.85 percent. This starts for corporate bank members on Nov. 15 and for individual customers on Jan. 1 of next year.
This move comes from the result of low interest rates, and negative interest rates have been used in Switzerland since 2015, as well as in countries that use the euro from around 2014. The rates are meant to encourage people to borrow and help to stimulate the economy.
However, the policies have been hurting Swiss banks, and they want to pass some of that burden to more affluent customers. UBS, for example, said it would try a similar approach for corporate customers.
For cash balances over $2 million, a 0.75 percent fee will apply and that will start in November. UBS will also lower the line for its 0.6 percent fee to people who have a balance of $557,000, which is down from $1.1 million.
“Conditions in money and capital markets remain very challenging,” UBS said in a statement.
Incoming European Central Bank president Christine Lagarde, who will take control of the ECB around the same time when many of the new policies are going to be put into effect, said that without negative rates citizens would be “worse off.”
She said she would pay attention to the issue and monitor potential “adverse side effects” when she became president.