When banks actually charge you interest on savings...could happen

Lokolo

.... for free....

Fair enough at the moment banks have high charges to keep things running but what happens if they change everything to say banks can't charge these sort of prices? End up being Europe like and banks charging for services. By all means you can not use a bank but I for one would be willing to pay for it, if they offer a decent service.

cos69

Some banks have always had accounts where they charge for current account services whilst other banks/building societies have provided free banking; cannot see that ending - you will have a choice although might be only online banking remains charge free.

As for savings, there is over a £1 trillion of cash in savings accounts. Could be more now people are saving rather than spending. What seems to have happened is the government has taken control of interest rate policy away from the BoE and is making the interest those savings once generated very low to help reduce the costs to borrowers. Should people start moving that £1 trillion of cash savings out of the UK then that would cause big problems; the cash is no longer there its all with borrowers.

isofa

Lokolo wrote: »

.... for free....

Fair enough at the moment banks have high charges to keep things running but what happens if they change everything to say banks can't charge these sort of prices? End up being Europe like and banks charging for services. By all means you can not use a bank but I for one would be willing to pay for it, if they offer a decent service.

I see your point, banks that have offered me a poor service lose my custom instantly (Abbey as an example - utterly appalling, lost my personal business, all my family's accounts and the potential of a large business too).

Remember, those in credit (and business often have decent balances - as do some consumers) are partly funding banks other interests, investments, mortgages etc.

Banks make a great deal from depositors cash (or do in the good times at least!), compared with the interest rates they offer back, so in my eyes they are already earning well out of my balances to offer "free banking" without having to charge a monthly fee. They also make income from overdrawn accounts, other additional bank charges, credit cards to those in debt etc.

I demand very little from my bank, so perhaps for customers like myself, they should offer a simple no-frills service, and if you want to talk to a personal banker or anything else "value added" you can pay extra. I imagine my business account pays easily for my and my family's personal accounts just via maintenance charges (absolute basic fee on a business account, with zero transactions, is an average of £60 per year, then an additional fee for each and every transaction, be it debit or credit.)

eeja

lilac_lady wrote: »

If banks charged for keeping money on deposit, I'd buy shares in piggy banks, (poor) safes (comfortable) and guns (rich) in case everyone decided to keep their money at home!

As mentioned by me on an earler posting they did in fact charge interest in Switzerland on deposits made in Swiss francs ie a negative interest rate but this was only on new money coming into Switzerland. [The Gulf states refrained from doing this when they had money pouring in up to their eyeballs last year/early this year.]
But the reasons and background to this negative interest rate were the opposite. In the case of Switzerland and the Gulf States they wanted to keep money out whereas the BOE would love to have money coming in !!

cottager

Re. business accounts, I couldn't say OH and I love the bank to bits for charging his account for every individual transaction, as obviously we'd prefer they didn't; specially when business has slowed so much over the past few months and things are starting to get pretty tight cashflow-wise. But he's been self-employed many years, we know the score, and accept that paying account charges goes with the territory. The only thing which always goes against the grain slightly is paying for every item banked IN to the account, as well as what goes out. For a very small business like his (him and one employee), that really would be a welcome concession... and help a great deal.

opinions4u

Banks will always have a margin between raising funds and lending them on. It's a rather complex concept called "making a profit".

So even if BofE rate is 0%, LIBOR or savings rates would be more than this and the rate we pay again would be higher still.

One option that I would expect banks to be considering actively would be an attack on low balance high transaction savings accounts.

A monthly "account fee" of £2.50 for accounts with less than £1,000 (or other 'nominal' sum) or a transaction fee of £1 a time after the first withdrawal in a month on accounts where the average balance is less than £1,000 would be a way of drawing in income without risking losing the business of more valuable savers.

In fact I would personally welcome the transaction fee on all customers who have a cash card and choose to queue in a bank branch to make a withdrawal they could actually use the nice shiny ATM for.

Other options savers always have if rates are too low would be to simply pay off debt or give the money to family.

RayWolfe

isofa wrote: »

so in my eyes they are already earning well out of my balances to offer "free banking" without having to charge a monthly fee.

Really? How much do you keep in your current account? I thought you were an MSE!

nilrem_2

opinions4u wrote: »

Other options savers always have if rates are too low would be to simply pay off debt or give the money to family.

And if you live on your savings interest and give the capital to your family?