Negative interest rates in Japan are going to begin taking a bite out of “your” money (energy)

Bank of JapanIf anyone is wondering how negative interest rates will impact their investments, banking and deposits in Japan, here is an opening article that may be a good source to reference to understand better how negative interest rates will impact your energy and how it is transformed into money. The idea here is that it takes your energy in exchange for the money you receive for your productive capacity and time. Energy transformed into money. Taxing bank withdrawals from ATM machines is a predatory tax. It’s like JP Morgan’s profits of which roughly 80 percent are from fees and penalties.

JP Morgan designed a rigged banking system. The banks write the regulations and then the politicians who are in their pockets enact banking laws. So they bribe the politicians and say this is how we would like the laws to be set up. The banks are regulated by systems they create. Is that a bureaucracy or a private operation?  It’s lawyers who write the banking regulations and laws which are implemented knowing that their rules could never be followed precisely. Then when you make an infraction with JP Morgan you are fined and its your fault. Banks at their core are predatory institutions and they are not in existence to see you achieve any financial benefit.

Source: The Japan News

Living with a negative rate / Low interest rates make attention to bank fees a must

The Yomiuri Shimbun

February 28, 2016

The Bank of Japan introduced a negative interest rate policy on Feb. 16. Already, many banks have lowered their own interest rates for savings accounts and housing loans. As interest rates fall to unprecedented lows, how should consumers deal with financial institutions? This is the first installment of a two-part series.

Interest rates on savings are falling, lowering consumers’ expectations of earning much from interest. Meanwhile, fees for using the services of financial institutions remain unchanged, placing a heavier burden on consumers.

For example, withdrawing money from a bank ATM is typically free during the day, but may cost from ¥108 to ¥216 (including tax) per withdrawal early in the morning, late at night, or on weekends. ATMs in convenience stores apply similar fees or higher.

“If you use ATMs without giving it much thought, the fees can easily add up to much more than the gains from interest. Pay attention to the fees,” warns economic journalist Hiroko Ogiwara.

Some banks have taken ease-of-use into consideration and made withdrawals from ATMs in convenience stores and other places free of charge. Japan Post Bank Co. has made withdrawals free around-the-clock at its “Yucho ATMs” in around 500 FamilyMart locations, including in the Tokyo metropolitan area. Customers of Shinsei Bank Ltd. can use the ATMs of megabanks, Japan Post Bank and partnering convenience stores free of charge at any time.

It is also possible to save on fees applied to bank transfers. For example, sending ¥30,000 from one major bank to an account in a different bank costs ¥864 (including tax) at a bank window, but just ¥432 (including tax) at an ATM using a cash card, and ¥324 (including tax) using Internet banking. Furthermore, certain accounts at major banks or Internet-only banks without physical stores allow a limited number of free online transfers per month.

Some financial institutions in other countries charge fees for keeping an account open. The practice is almost nonexistent in Japan, but overseas institutions may choose to implement it here or raise fees on transactions to secure profits.

Since there are very few benefits to leaving money in the bank, some may want to invest their savings. However, buying stocks and shares of investment trusts also incurs fees.

For example, in the case of investment trusts, many securities companies charge around 1 percent to 3 percent of the total amount as commission at the time of purchase, though commission is free in some cases.

Just by holding shares in the trust, investors are charged a so-called trust fee by the asset management company that typically amounts to from 0.5 percent to 2 percent annually. Take these fees into consideration when deciding whether to make a purchase.

Also, in the case of investment products, there is a risk of losing money due to poor management or the company going bankrupt.

It is important not to be too risky and to maintain cautious strategies such as limiting investments to just a portion of excess cash.

“Don’t be seduced by financial institutions’ advice to invest rather than save; be careful when making investments,” said Ogiwara.

In response to the negative interest rate, Sumitomo Mitsui Banking Corp. lowered its annual interest rate for general deposit accounts from 0.02 percent to 0.001 percent, a reduction by a factor of 20. Previously, a deposit of ¥100,000 generated ¥16 in after-tax interest a year, but that amount will fall to zero yen.

Although the possibility remains that banks will further lower interest rates for deposits, it seems unlikely that rates will fall into the negative range. “If they go negative, many, in the realization that ‘depositing means losing money,’ will rush to cancel their accounts, possibly leading to a bank run,” financial planner Yasuhiko Fukano said.

At the same time, he pointed out, “considering the economic situation and the consumption tax hike planned for next year, it seems likely that the negative interest rate policy will continue for a year or two.” Consumers should expect low interest rates to continue for quite some time.