Negative interest rates are slowly becoming a reality for much of the developed world.

With them has come a charm offensive, with at least one board member of the European Central Bank seeking to justify such moves. But all the jaw-boning in the world doesn't mean such policy actions always make sense, or that they come without creating other problems.

With negative rates, central banks assess a percentage charge on reserves they hold overnight for financial institutions. This gives the institutions a choice between paying to keep money in reserve or lending more cash to customers, on which they earn a return. In theory, that prompts them to extend more credit, which gives consumers and businesses more spending power, leading to economic growth.

It's not a concept that comes without risks: It pinches bank profits, and unnerves markets and some consumers. So what are the reasons to reject such a strategy?

-- It's more of the same, lame policy game

Albert Einstein noted that doing the same thing repeatedly while expecting a different result is the definition of insanity. Central bankers may well have fallen into that trap.

After years of near-zero interest rates and massive money-printing programs, "central banks are increasingly powerless when it comes to the economy itself," according to a recent report from Economic Cycle Research Institute, titled Grand Experiments That Are Too Big To Fail.

The report highlights the fact that both the Federal Reserve and the European Central Bank have little growth to tout, despite their extraordinary efforts in the wake of the global financial crisis. Negative interest rates sound fancy, but in reality they are just another cut in the cost of borrowing.

As the institute aptly puts it: "They can "print" money, but not economic growth."

-- It could make matters worse

Negative interest rates might actually cause people to save even more cash than previously.

If you are setting aside funds for a $50,000 down-payment on a house, and then the bank makes interest rates negative, you might simply stockpile more cash to compensate for the impact, says ECRI's cofounder Lakshman Achuthan.

That seems even more logical when consumers don't believe that prices of the goods are falling, he says. 

-- It looks desperate

"I'm in sync with the argument that negative rates can be a sign of desperation," says David Ranson, director of research at consulting firm HCWE Worldwide Economics. "There is desperation in Europe."

Despite what some say, central bank chiefs are just as human as the rest of us. Maybe they simply do not know what to do next. Rather than do nothing, they've decided to push the cost of borrowing down even further.

-- It could undermine banking stability

"Who would want to own a bank where negative interest rates are present?" asks Joe Brusuelas, chief economist at professional services firm RSM.

Sub-zero rates impose a profit-squeezing tax on lenders, and many have been reluctant to pass it on to customers, with some European firms charging business accounts but leaving consumer holdings untouched. It's quite possible if they didn't that depositors would drain their accounts to avoid the negative rates, thus depriving the banks of funds to lend.

If banks themselves decide to circumvent the costs of negative rates by holding more bills and coins, other costs will balloon, such as storage, security, and transportation of physical cash.

In short, it's bad news for lenders such as the stocks in the Financial Select Sector SPDR exchange-traded fund  (XLF - Get Report) , which tracks financial companies.

What's more, reduced profitability would reduce the stability of the financial system.

-- It may cause bubbles.

"Sweden's negative interest rates have ignited what looks to me like a real estate bubble," says Brusuelas. Just like in the early 2000s in the U.S., low interest rates, in this case negative, have spurred home-buying. 

That can cause the housing sector to draw capital away from more productive areas of the economy, such as new factories. Bubbles also have a tendency to pop, and when they do, it can be disastrous for the real economy. A case in point is the mid-2000s housing bubble in the U.S., whose collapse prompted the 2008 financial crisis and the Great Recession.

-- America doesn't need it yet

The U.S. economy is growing, and government measures of inflation are rising. Indeed, both former Fed Chairman Ben Bernanke and his successor, Janet Yellen, have downplayed the likelihood of negative rates in the U.S. 

Constance Hunter, chief economist at KPMG, projects growth in the world's largest economy will reach 2.2% in 2016 and rise to 2.4% in 2017.

"We won't need to go to negative rates, unless we get hit by a phenomenal shock from overseas," Hunter says.

So far, so good.

Read More: See TheStreet's full 'Below Zero' package here.