eli5 What does it mean that japan had negative interest rates?

Question

I understand that this is designed to stop deflation, but what does it mean practically speaking?

In: Economics

Answer 1

Alright, imagine you have some money saved up in a piggy bank. Normally, if you keep your money in the bank, they give you a little extra money in return, called “interest.” But in Japan, the situation was a bit different. Instead of giving you extra money, the bank might actually take a tiny bit of your money away each year. This is what’s called “negative interest rates.”
Practically speaking, it means that if you keep your money in the bank, you might end up with a little less over time instead of a little more. The idea behind negative interest rates is to encourage people to spend their money instead of saving it, which can help boost the economy when things are slow.