What to do if The Fed drops interest rates below zero?

Disclaimer: This is not financial nor tax advice, please speak to a professional before making any drastic changes. This post may contain affiliate links.

First things first...Do not Panic

Some news outlets are reporting that the Fed might lower interest rates into negative territory, which is where most of the world has been. Sweden actually just ended it a few months ago. After 5 years of it being negative, it finally is holding on at 0%. This did not affect my savings account, because they held those at 0%, fortunately. However, due to inflation I did lose some money. But is that going to be the same in the U.S?

What does this mean?

This means that the borrower will be paid to borrow money from the lender. Essentially, your mortgage rates will earn you money. However, this means that borrowing will most likely become difficult, just like it did after the Financial Collapse of 2008. 

What will happen to my savings account?

It is unlikely that the banks will hold savings accounts at negative interest rates but it is still possible. We are most likely to see many interest-earning accounts drop to nearly zero., which is where most of the larger banks have held it for many years. Which is why many people moved their money from these accounts to high-yield-savings accounts (HYSA). 

HYSA’s do exist in Sweden, in theory, but their interest rates are still comparable to the bigger banks anyway, so I never bothered to transfer my money. 

If you have a HYSA then be prepared that it will fall to near zero.

What is the point of negative interest rates?

It is to help stimulate the economy, since borrowing is cheaper, the Fed is using cheap money as an incentive for people to borrow at  lower interest rates, essentially cheap money. 

However, with many Americans currently unemployed and receiving unemployment, it is unlikely that they will get approved for these types of loans. 

What do I recommend?


2. Stay away from predatory lenders! The main ones being pay-day loans, loans that have a interest percentage rate of over 8%. Do not give your hard-earned money to them. I have never used them but when I worked in banking, it was something I came across on a regular basis. Especially since my role was partially a financial counselor, so I would help people get back on track. But still. 

3. Work on your credit-worthiness and see if you’re eligible to refinance any high-interest loans, including student loans or credit cards balance transfers, see below.

4. Begin investing. The market fluctuates, but it has goes up and down but over time it has risen. Additionally, as you leave your money in a savings account or in cash, you lose the value over time due to inflation. When you invest in the stock market, you are actively building wealth. For instance, the annual return on the stock market over the last 100 years is 9%, accounting for inflation. 

I recommend both Robinhood and M1 finance for different reasons. You can buy whole stocks or ETFs with Robinhood and they recently allowed the purchase of fractional shares for some members. With M1 Finance, you create a portfolio and determine how much of a percentage each stock will be in your portfolio. When you deposit money in M1 automatically purchases for you based on those percentages. If you want to hear about other investing options, I have compared Robinhood with Acorns, read more here

If you have high interest with student loans, try refinancing with Earnest.

They have some of the lower rates on the market.

Credit card balance transfer card. 


  • Cash Balance Transfer fee: Either $5 or 5%, whichever is greater.
  • Balance Transfer APR is 0% for the first 15 months.
  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening.
  • Earn unlimited 1.5% cash back on all purchases.
  • 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 – 23.74%.
  • No annual fee
  • No minimum to redeem for cash back
  • Cash Back rewards do not expire as long as your account is open

Upon signing up you will get one free stock.

Get $10.00 to start and use towards your portfolio.

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