End Of Free Banking ?

richardlionheart

question:

With the state our Banks are in , will we see them all pushing to end the era of free banking ? has anyone got news on this front ? as they could claim a tidy sum each month .

As i have grown up with this ,i have never known it to be any differant , i know some accounts like Lloyds "privilege" type account
cutomers pay £8.00 per month but receive free AA and some travel insurance
and the like. ( i have an A@L but get free euro travel insurance )
i shop around and get motor breakdown from whoever does the best deal for the year.

I have friends in Australia and they dont sound like they have ever had free banking ?
is it just a UK thing ?

I hold 3 bank accounts ( had a lot more once ) if they all start charging monthly i will of course
go down to the one that gives the best value. or just a Building society ,if its possible
to get by that way.

I remember when i left college one could sign up to as many banks as one could
and see what freebies they could accumilate ( free cds ,travel cards , etc ect )
how things have changed idea was on their part , get them young and they stick with you .loyal customers.

My late father had banked with the Midlands bank all his life ( i forget what it was before it was the Midlands bank ) but nowadays loyalty to anything is scare.
will it ever return ?

apt

Although some banks keep threatening it, I don't think we'll see an end to 'free' banking. Even if the big banks tried to introduce charges whilst in credit, others would offer free banking to attract a lot of new customers. Also the actual cost to banks of running current accounts before the rise of debit cards, direct debits and internet banking must have been a lot higher than it is now.

RayWolfe

Expect to see charges for all bank accounts in the UK - in line with most other countries - should the banks lose the case, now in the courts, concerning overdraft charges.

gozomark

Customer have always paid bank charges on way or another - its just that its becoming more transparent - back when inflation was 10% and current accounts received no or little interest, bank charges were indirect - now inflation is targetted at 2%, the banks make alot less money on current accounts - another reason to expect bank charges to be come direct

oldagetraveller

I would hope, if they do start "charging", they revert back to as it used to be. Can't remember the exact dates or figures but, balance £250 or more no charges then it was £100 or more then 0 or above.
That's got to be fairer for those who have always and still do handle their finances responsibly?

gozomark

its not a matter of only charging customers who don't act responsibly - in fact its "irresponsible" customers who tend to be more profitable. Fairness doesn't come into it

with interest rates of around 3%, having a customer with £100 in a current account earning 0%, earns the bank £ 3 a year - hardly enough to cover the banks expenses - maybe a minimum of £ 1,000 might get you "free" banking, when interest rates are so much lower now than in the 70's and 80's

richardlionheart

with that in mind ,that is a way they could get those customers with just a couple of hundred pounds just sitting there ( i do this with my Lloyds account that has a few direct debits and is funded everymonth just enough to cover those , they must love it ) to move out.

I had a credit card with Halifax a while now ( opened it to get the M@S voucher at the time and the 6 months interest free credit ) then it has sat for a few years now
until recent when they have sent me a few letters and as stated they are
cancelling it unless i have any objections. which i dont.
I like so many open these things to get the best out of them and it seems
to much like hard work to shut them down.

anyways back to topic.
At this present level of savings rates , if banks again offered some good perks
to keep a minimum of say £1k i could see that working.

so long as if/when things improve they change with the times.

only downside to this is if Banks started to penalise those who ran their accounts on nearly empty all the time , this would be a bit like how the gas/elec make
extra on those with meters.

oh and another question
the ex building societys which became banks ( Alliance and Leicester etc )
how is it that they do not do ALL the things that real bank do ?
example paying off a utility bill at branch ? unless thats fixed now.
i remember i tried that once and got turfed out ! .had to go to
to my co-op bank and pay it there.:D

oldagetraveller

gozomark wrote: »

its not a matter of only charging customers who don't act responsibly - in fact its "irresponsible" customers who tend to be more profitable. Fairness doesn't come into it

with interest rates of around 3%, having a customer with £100 in a current account earning 0%, earns the bank £ 3 a year - hardly enough to cover the banks expenses - maybe a minimum of £ 1,000 might get you "free" banking, when interest rates are so much lower now than in the 70's and 80's

Well, I for one would think it grossly unfair if someone who is constantly going overdrawn was charged the same as an individual who is always and has ALWAYS, in spite of a low fixed income, been in credit. Of course fairness comes into it.
My figures are from 30 years ago so yes a £100 minimum credit balance would now equate to something higher. So if it's £1000 then so be it. I'd be fine with that.

gozomark

I would be happy to pay a fee for having a current account, refundable if your balance is above X - if you go overdrawn you pay interest and/or a fee - seems acceptable to me.

Blah99

richardlionheart wrote: »

i know some accounts like Lloyds "privilege" type account cutomers pay £8.00 per month but receive free AA and some travel insurance and the like.

Yes, a lot of the big banks have tiered accounts. For example NatWest has an Advantage Private service that provides access to your own account manager, an investment advisor, a travel service, travel insurance etc etc. It's all provided for "free", but there's a £250 per year subscription charge (plus you have to qualify for the account, including having something like an income over £75k). HSBC has the same, if you have over £50k deposits and a £200k mortgage, or a £75k salary.

"Free banking" is a myth, anyway. The charges & costs are simply hidden away so that they're not obvious, but you still pay them. What you're talking about is overt charging for banking services like they have in the USA. I think banks will move to annual charges for some account holders, but we won't end up with the micro-charging they have in the USA (eg: pay per cheque, pay per direct debit etc).

Lansdowne

Blah99 wrote: »

I think banks will move to annual charges for some account holders, but we won't end up with the micro-charging they have in the USA (eg: pay per cheque, pay per direct debit etc).

Why not? That's how small business accounts are often charged. I am treasurer of a non-profit orgnization with two bank accounts. One charges 30p or something per debit, the other charges a tiny percentage of each debit. That means the banks already have the software to work it out and it will hit small account holders less.