Negative interest rates: what they mean and how you can prepare for them

After years of positive interest rates and economic stability, negative interest rates are once again in the spotlight in Switzerland. While many consider them a thing of the past, current monetary policy developments show that a return is not out of the question – especially in the context of falling inflation and global uncertainties.

In this article, you will learn what negative interest rates are, why they are used, how they can impact your wealth, and which strategies individuals and businesses can adopt to protect themselves.

What are negative interest rates and how do they work?

Negative interest rates mean that money loses value in an account. Instead of receiving interest, account holders pay a fee for their deposits. This mechanism was introduced by central banks, particularly after the 2008 financial crisis, to stimulate the economy.

The Swiss National Bank (SNB) lowered its key interest rate to -0.75% in 2015 to curb the appreciation of the Swiss franc. As a result, commercial banks also introduced so-called "deposit fees" for large deposits, especially for businesses and wealthy individuals.

The goal of negative interest rates is to encourage lending, stimulate investment, and counter deflation. However, they present new challenges for savers and businesses: traditional savings accounts are hardly profitable anymore – those who don't rethink their approach risk real wealth losses.

Current situation of negative interest rates in Switzerland

After a prolonged period of negative interest rates (2015–2022), the SNB exited the negative interest rate regime in September 2022. Since then, the key interest rate has been raised in several steps – to 1.75% by June 2023 – to counter the inflation that had risen in the meantime.

However, in 2024, the trend reversed: inflation in Switzerland fell sharply and approached zero, prompting the SNB to lower interest rates in a series of cuts. By March 2025, the SNB's key interest rate had been reduced again to +0.25%.

What does this mean for you?

Currently, no Swiss major bank applies negative interest rates to retail customer deposits. However, if the key interest rate drops further into negative territory, this could change – especially for clients with very high balances.

Experts disagree: Financial market experts and economic institutes offer a mixed picture regarding future interest rate developments in Switzerland.

Here is an overview of some forecasts and assessments in 2025:

• KOF ETH Zurich: The economic research institute expects that the SNB's key interest rate will be lower by the end of 2025 than it is at the start of the year. While they consider a return to negative interest rates possible, they believe it is unlikely​. Interest rates are expected to be near 0%, but probably not significantly lower.

• Swiss Bankers Association (SBA): In its Swiss Banking Outlook, the chief economists and CIOs of banks mostly predict that the SNB's key interest rate will fall to 0.25% by mid-2025, and fall to 0% or even below by the end of the year. This is due to low inflation expectations (forecast: just 0.6% inflation in 2025) and economic cooling. Negative interest rates are therefore not ruled out if inflation remains under pressure.

• Survey of economists (Reuters): A large majority of experts surveyed by Reuters in March 2025 expected the SNB to pause after lowering the key rate to 0.25%, keeping the rate at that level at least until 2026. Nearly 60% of experts expected 0.25% at the end of 2025, with some seeing a decline to 0%. Very few anticipated a return to negative rates: 13 out of 15 experts rated the risk of negative interest rates as low. Most expect persistently low but not negative interest rates to be the most likely scenario.

• SNB communication: The SNB itself emphasises its data-dependent stance. It would only reintroduce negative interest rates if there were a clear risk of deflation. Schlegel and Jordan highlight that they aim to secure price stability in the medium term and tolerate individual months of negative inflation. Internal forecasts suggest that inflation in 2025 will average around 0.6% – just above zero, which does not signal an urgent need for negative interest rates.

In summary, experts expect continued low interest rates in Switzerland. Whether the 0% mark will be breached again remains debated.

Tips for dealing with negative interest rates for Individuals

An environment of negative or low interest rates presents particular challenges for individuals. Traditional savings in bank accounts no longer yield significant returns, as many accounts offer only 0–0.25% interest – far below the current inflation rate. The real value of money therefore declines, even if no direct fees are charged.

During the negative interest rate phase from 2015 to 2022, Swiss private customers were largely spared from explicit punitive interest rates. However, with the ongoing low interest rate environment since 2024 and the prospect of further interest rate cuts, the question of alternative investment strategies is once again gaining importance.

Here are some proven measures:

1. Invest money strategically instead of "parking" it

Cash in your account is convenient, but in a low-interest environment, it is often not value-preserving. Many Swiss individuals are therefore seeking higher-yield alternatives.

Possible strategies include:

• Broadly diversified ETF portfolios designed for long-term wealth accumulation

• Bond funds or equity funds that offer a risk-appropriate return

• Individual investment advice to consider personal goals, investment horizon, and risk profile

The Swiss National Bank (SNB) itself has pointed out that savers can also change banks if interest rates are unsatisfactory to obtain better conditions. Actively managing your capital is becoming a necessity – especially in times of structurally low interest rates.

Important: Every investment carries risks. However, a clearly defined investment horizon and good diversification can help smooth fluctuations and achieve real wealth growth.

2. Use pension pillar 3a or 3b strategically

Private pension plans are not only tax-efficient but also an effective lever against purchasing power loss:

• Contributions to pillar 3a (up to CHF 7,056 in 2025) can be deducted from taxable income

• The free pension plan (pillar 3b) also offers flexibility for individually tailored investment plans

Especially in an ongoing low-interest environment, an active pension strategy can help secure long-term retirement savings while also seizing investment opportunities.

More on this: Optimally use pillar 3a

3. Consider foreign currencies and geographical diversification

Deposits in stable foreign currencies can offer more attractive conditions than CHF accounts, depending on the interest rate environment.

For example, Alpian currently offers interest-bearing foreign currency accounts in EUR and USD – an interesting option for those wishing to diversify their capital beyond the Swiss Franc.

Furthermore, risk can be reduced by geographically diversified investments. For example, investing in international ETFs or equity funds allows you to benefit from different economic developments worldwide. This reduces concentration risks, such as reliance on the Swiss economy.

Important: Foreign currency investments carry exchange rate risks. Informed advice helps to find the right allocation and make the most of opportunities.

Conclusion: Strategically respond to negative interest rates

Negative interest rates remain a monetary policy tool that may be used again in economically uncertain times – even in Switzerland. Although they are not currently in place, the ongoing low interest rate environment forces individuals to rethink their approach.

Anyone relying on traditional savings accounts today risks gradual purchasing power loss. Investment-oriented strategies, optimised pension planning, and professional advice help protect and use wealth in a sensible and long-term manner.