Economics: Bank of New York Mellon Will Charge Clients to Hold over $50M in Deposits

A bank is paying negative interest ...

Bank of New York Mellon Corp. said Thursday that it will charge its customers a fee to hold cash deposits over $50 million.

The bank said it has seen such a large increase in deposits over the last month that it will charge a 0.13% fee to clients with "extraordinary high deposit levels."

Normally, banks pay interest to customers for deposits. But with short-term interest rates near zero, and increased FDIC insurance premiums on deposits, it hurts banks when they hold large amounts of cash on their balance sheets. Deposits are considered a liability because they can be withdrawn at any time. When liabilities go up, banks pay more for FDIC deposit insurance.

Geller believes that the fee on deposits could soon trickle down to consumer deposits too. He said the same economic conditions and nervousness are impacting the American people as managers of pension funds.

For more, see Bank of New York Mellon Will Charge Clients to Hold over $50M in Deposits by Pallavi Gogoi, August 4, 2011 at The Huffington Post.