cashier check and interest rate

Question

I see news that in Germany banks are asking people to take the money to other banks and need to pay bank negative interest to keep money.

A co-worker pointed a strategy that we can possible use in USA, and that is to keep the money with Bank, but at same time get a cashier's check issued leaving less money(effectively) in account as Bank will withdraw that money from Account immediately so Balance will be less ( so will accrue less [negative] interest) and at the same time, do not deposit the cashier's check till the check expiry nears and keep the check safe.

So the question is, will this trick work if and when interest rate goes negative in USA?

Note: some points in comments are.

• Theft of cashier's check
• forfeiture of FDIC

Answer 1

Is it possible? Sure.

Is it wise? That seems unlikely at least where interest rates are in Germany today. Even if you have to pay 0.5% annual interest to keep money in the bank, that is likely to have a positive expected value over keeping a paper cashier's check. There would often be a small fee to get such a check. Even if your bank would give you a check for free, you'd have to have less than a 1 in 200 risk of losing the check in order for the strategy to have a positive expected value. That's well in the range of the risk most people have of experiencing a flood, fire, or other natural disaster. Plus the risk of theft or forgetfulness. And most people are rather risk averse so you'd need the risk to be much less than 1 in 200 for them to willingly gamble $10,000 in the hopes of winning $50.

Answer 2

Might I suggest reading this Investopedia article on negative interest rates?

https://www.investopedia.com/articles/investing/070915/how-negative-interest-rates-work.asp

Negative interest rates fall into a couple different categories. If a central bank has a negative interest rate policy in place, it is their way of "encouraging" lending, since a negative interest rate means the banks have to pay for un-loaned capital they hold on their books. It's a sort of penalty for not being more liberal with lending policies. Rarely will you see negative interest rates being offered by banks to customers, especially in the U.S.
Why? Banks in the U.S. are constrained in their lending by their capital reserves, which are dictated by customer deposits. So, a bank can only loan a certain amount of money (usually a multiple of its capital reserves) and is dependent upon more deposits by its customers to add to that amount. Charging customers to keep money in the bank would have the opposite effect, chasing customers from that bank to competitors who either don't charge a negative rate at all or whose negative rate (assuming everyone is charging it) is less. I don't see such a thing happening here in the U.S., if for no other reason than it is bad public relations. Better to offer no interest at all than to tell customers they have to pay to keep their money in its accounts.