I live in a EU country where I have a currency account in CHF with a local bank. The interest rate of this account is 0.01%, whereas the interest rate in Switzerland is currently at -0.75%. Doesn't this mean that I'm better off depositing CHF in my bank than Swiss people doing this in their banks living in Switzerland? How does my bank benefit from having higher interest rates? It seems to me that my bank can't really invest the money that I deposit with them, because of the negative interest rate in Switzerland.

1 Answer 1


Most banks typically charge a spread. Borrowers will pay a higher rate than savers will get paid. That difference is how the bank makes its money.

For small balances the bank may eat the negative rates, or even provide a token interest amount (which appears to be the case here). The money lost in interest may be made up in other ways, such as debit card use or transaction fees. Some of the rationale may be due to the difficulty and cost of explaining how negative rates work to large numbers of unsophisticated or confused customers.

With larger accounts, the spreads typically get smaller, and subsequently any negative rates will be passed on to the account holder. If you look closely at the Terms and Conditions of your account, you will likely find that the accounts have a maximum balance (e.g. 100,000 CHF, which would equate to 10 CHF in interest per year at 0.01% ).

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