Interest rates are the price paid to borrow money. The bank has borrowed the depositor's money and is paying an interest rate for the privilege of using the depositor's money.
A negative interest rate means the banks will charge negative interest meaning that instead of receiving money on deposits, depositors must pay to keep their money in the bank. At the same time, borrowers enjoy the privilege of actually earning money by taking out a loan.
Sensible depositors would withdraw their money from the bank and pay cash for purchases and store the remaining cash in their mattress at home.
"We're taking a look at them ... I wouldn't take those off the table," Federal Reserve chair Janet Yellen said Thursday at a Congressional hearing. Yellen and other experts stress that the U.S. economy would have to get much worse before the Fed would contemplate such a move.
But if the U.S. does go negative, it wouldn't be alone. Five central banks -- Denmark, the Eurozone, Sweden, Switzerland and Japan -- now have negative interest rates. In fact, Sweden's central bank took its rates even deeper into negative territory on Thursday.