End of free banking

JamieD_2

Interesting mix of opinion. Think that the majority opinion would not mind said fees in exchange for charges being reduced fom their current levels. Not entirely surprising given the forum in which I posted

While some folks think that it could never happen, due to market forces working the way they do - "someone will offer it for free and the rest will have to follow" - I don't quite agree.

"Price fixing" to put it crudely does go on in the world. Diamonds, energy, groceries. All it takes is for the major suppliers to uniformly alter prices and many people are left with no viable alternative.

Couple that with a little bit of smoke and mirrors - tack on a few extra features such as discounts on insurances, and many people will simply accept and adjust to the costs. We can read on this very site that loyalty doesn't pay, yet how many people across the country are still using inferior products and services out of apathy and routine?

Note to lawyers: In no way am I suggesting that the Big 4 or any financial services would stoop to such murkey and shady practices. I have nothing but admiration to the way in which they do business. I'm broke anyway - no point in asking for damages

PROLIANT

Now now gentlemen, play nicley After all it is the season of good will to all men.

PROLIANT

JamieD wrote: »

Interesting mix of opinion. Think that the majority opinion would not mind said fees in exchange for charges being reduced fom their current levels. Not entirely surprising given the forum in which I posted

While some folks think that it could never happen, due to market forces working the way they do - "someone will offer it for free and the rest will have to follow" - I don't quite agree.

"Price fixing" to put it crudely does go on in the world. Diamonds, energy, groceries. All it takes is for the major suppliers to uniformly alter prices and many people are left with no viable alternative.

Couple that with a little bit of smoke and mirrors - tack on a few extra features such as discounts on insurances, and many people will simply accept and adjust to the costs. We can read on this very site that loyalty doesn't pay, yet how many people across the country are still using inferior products and services out of apathy and routine?

Note to lawyers: In no way am I suggesting that the Big 4 or any financial services would stoop to such murkey and shady practices. I have nothing but admiration to the way in which they do business. I'm broke anyway - no point in asking for damages

What a very good and concise post, thank you for your input it is very welcome.

gt94sss2

JamieD wrote: »

Interesting mix of opinion. Think that the majority opinion would not mind said fees in exchange for charges being reduced fom their current levels. Not entirely surprising given the forum in which I posted

I suspect, if asked, most people would actually mind having to pay monthly fees for bank accounts to see a minority pay lower fees when overdrawn.

In some ways its the same as interest rates - most of the attention is what the rate is for mortgages despite their being something like 6x more savers than borrowers..

While some folks think that it could never happen, due to market forces working the way they do - "someone will offer it for free and the rest will have to follow" - I don't quite agree.

I agree with you - I suspect many people forget that there was a time that no bank paid any interest on current accounts... - and it wasn't that long ago..

Regards
Sunil

opinions4u

gt94sss2 wrote: »

I suspect, if asked, most people would actually mind having to pay monthly fees for bank accounts to see a minority pay lower fees when overdrawn.
Only 5% pay charges at the moment. I'm not so sure that the other 95% would willingly vote for Christmas. Think we share a view.

I suspect many people forget that there was a time that no bank paid any interest on current accounts... - and it wasn't that long ago..
I think you'll find most banks pay 0.1%. Barclays have paid 0% for most of this year. We are already there.

I think we'll see some innovative ideas from the banks over the coming months. I for one believe that some will retain free banking for those who remain in credit. Those who use their overdrafts within limit will pay more. Those who abuse their overdrafts will pay less than they do at the moment.

YorkshireBoy

opinions4u wrote: »

Those who use their overdrafts within limit will pay more. Those who abuse their overdrafts will pay less than they do at the moment.

And the likely outcome being the banks will actually INCREASE their profits!

After all, assuming, say, 40% use their O/D's regularly, then the income that 5% used to generate will now be generated by 45% of account holders. And as far as I can see, the new fees (eg Barclays reserve, HSBC annual review) and charges per day (eg Halifax's planned move) are not too far removed (in terms of scale) from the existing charges that were challenged as being 'unfair'.

And most importantly for the banks, they're in plain and intelligible language and clearly desrcribed as fees for services requested...if requested by the customer, either directly or indirectly.

Time to buy bank shares?

RayWolfe

BarclaysManager wrote: »

You might perhaps also like to note that despite us NOT taking the taxpayer's money, we have voluntarily decided not to pay cash bonuses for this year and likely next year - so all about protecting our pay packets, huh?

When your CEO took, what was it, 15 million dollars last year, it's probably not too much of a strain to take a little less this year. What's his total "compensation" before bonus anyway? I suspect most of us would volunteer to waive our cash bonuses if the alternative was a public lynching.
Anyway, these guys are worth every penny and if they didn't get all that money, they care so much for their companies and communities they would go and offer their services elsewhere ... now wouldn't that be a shame

opinions4u

YorkshireBoy wrote: »

Time to buy bank shares?

You'll probably make money over a 3-5 year period, but the key issues are:

(1) Buying out the government will take up a few years of profit.
(2) Growth in the economy looks unlikely for a couple of years.
(3) Reliance on wholesale funding to grow lending would be a high risk strategy for any banker in this new age.

I'll sit on my existing holdings and see if some of my 94% losses are recouped. Not got the bottle to buy more though.

michaels

It is worth thinking about the impact of the very low interest rates on current account profitability - previously if you stayed in credit and avoided the fees with most current accounts you forgoed a load of interest on the positive balance at 0.1% - nowadays that big margin is no longer available to the banks.

Mortgages have become a lot less competitive with the big fall in lenders and products - I think the banks are likely to start pushing hard to charge for all current accounts, throwing in 'extras' that do not cost nearly as much as the figures quoted if you shop around (for example A&L free travel insurance now only covers Europe, has a huge excess and costs more to add on winter sports cover than a much better winter sports package on its own).

Don't get me started on the reclaiming debate either.

CDes

I don't think Free Banking will ever end because the government needs everyone to have a bank account for benefits etc.