The reason for negative APR

12/11/2019

Why is it that, when you go to open a current account, you increasingly see an APR of 0% or with a minus sign in front? 

In the present interest rate environment, most deposits and savings products offered by banks do not earn interest, or earn interest at a very low rate, i.e. they offer negligible interest or none at all. 

Managing the balances of these accounts and deposits and related services entails a cost, which is charged to you as fees.

Therefore, if your current account does not earn interest but you do have to pay fees, the APR, i.e. the return taking into account not only the rate of interest but also expenses, will be negative. 

Check it out in our deposit simulator.