Negative Interest Rate

a rate below zero, whereby the lender, actually or technically, pays Interest to the borrower. In 2002, for example, the federal funds rate was lower than the rate of inflation, resulting in a real interest rate that was, technically, negative.
An example of a negative interest rate in the literal sense is a private placement with institutional investors of debt-plus-warrants, a security called Squarz (pronounced “squares”) of Berkshire Hathaway Corporation, controlled by the Wall Street legend Warren Buffett.
Goldman Sachs, which designed the structure in mid-2002, called it the “first ever negative-coupon security.” Taking advantage of low market interest rates and high stock market volatility, Berkshire would pay about 3% a year on the bonds being issued. But the investor would also receive a warrant allowing the purchase of Berkshire stock and to keep the warrant alive, investors would have to pay a higher rate, perhaps 3.75%, at the same time Berkshire made the interest payments.
The net effect was a negative interest rate.

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