Bank charges

bookworm1363

Of course not, it's not free... But those costs are already incurred whether an account remains in credit or not, hadn't you noticed? :rolleyes:

Tweaking an account so that it bounces things at £0 over instead of £200, £500, or whatever the unseen limit is will cost exactly the same thing. In fact, a 0 tolerance will cost LESS to the bank, as it would then save on printing out automated letters, franking them etc... It's the equivalent of turning your thermostat down by one degree: that one time action doesn't need redoing all the time, it's done and it stays that way.

I'm still not hearing one valid reason against zero tolerance on o/draft limits. Anyone?

bookworm1363

ahai1 wrote: »

I think it is daft for the bounced item to be returned without charge. People just want a free ride.

That's an emotional comment, not an economical or logical one.

opinions4u

bookworm1363 wrote: »

That's an emotional comment, not an economical or logical one.

And saying that banks shouldn't charge is an economic argument?

Extant

bookworm1363 wrote: »

I'm still not hearing one valid reason against zero tolerance on o/draft limits. Anyone?

What do you propose the banks do when it comes to guaranteed transactions that they are required to honor? I.e. guaranteed cheques, or card transactions under a floor limit?

Also, regarding "no irresponsible borrowing without irresponsible lending..."

A bank will typically agree an overdraft for a period of twelve months, there after it being open to review and adjustment, etc.

A man, we shall call him Mr Fred Shred, has a senior job within his company and is handsomely rewarded by said company for his efforts. On the basis of said rewards, and a history there of, he is able to arrange an overdraft facility with his bankers, who we shall call C. Hoare d'oeuvre & Co.

For the next few months, Mr Shred does not need to use his overdraft facility, he maintains it merely for security. But, oh! Things have gone bad and he is now to be made unemployed. Mr Shred knows that he cannot afford to reasonably service this overdraft, but he needs the money. He then decides to spend the overdraft before his bank notices a downward trend in his credit turnover.

Has Mr Shred not borrowed irresponsibly, without the bank lending irresponsibly? C. Hoare d'oeuvre & Co. agreed the facility when Mr Shred was able to service it, and thus lent responsibly. Mr Shred, however, has then borrowed irresponsibly by not reporting his change in circumstances to his bank, and spending it all on whiskey and advice about pensions.

bookworm1363

I believe so, yes, at least I have given valid reasons for it. There is little if any economic justification for charging when bouncing items, and it is perfectly logical that a system which repeatedly tells us they want to help people not to get in debt should adopt a strict "no additional funds" policy.

Besides, the main point I am trying to discuss is changing a system where people can't go over their limit, and don't get charged. Instead of forever making the customer the one in the wrong (which is STILL an emotionally charged argument and little else), I am yet to see one valid argument against it.

Extant

bookworm1363 wrote: »

Besides, the main point I am trying to discuss is changing a system where people can't go over their limit, and don't get charged. Instead of forever making the customer the one in the wrong (which is STILL an emotionally charged argument and little else), I am yet to see one valid argument against it.

It is impossible to create a system where customers cannot go below zero, willfully or not.

How do you handle guaranteed cheques, offline card entries? I am yet to see you answer these issues in a valid way. Cheque guarantees are soon to go, but what of debit card transactions that do not hit instantly?

Banks can regulate for this in the UK to a certain extent, but you cannot regulate for this happening outside of the UK.

bookworm1363

BarclaysManager wrote: »

What do you propose the banks do when it comes to guaranteed transactions that they are required to honor? I.e. guaranteed cheques, or card transactions under a floor limit?

I think the guaranteed cheque is a bit of a red herring, tbh. One, most shops no longer accept cheques and I think we will see the total demise of the cheque system within the next 10 years at most.

Card transactions under a floor limit, hmmm. Do tell me, what is it that makes the difference that up to a certain level of over-spending, a card will still go through, and yet to a higher level of over-spending, it will get stopped? Is it not that yet again, that infamous invisible ceiling goes in action? In this day and age of instant transfers, are you seriously trying to tell me that any shop that wants to protect itself can not simply adopt a system fairly similar to the Faster Payments one? Come ON. Let's not look at the "this is the way we always have done things", let's look at "how can we make this work".

Also, regarding "no irresponsible borrowing without irresponsible lending..."

A bank will typically agree an overdraft for a period of twelve months, there after it being open to review and adjustment, etc.

A man, we shall call him Mr Fred Shred, has a senior job within his company and is handsomely rewarded by said company for his efforts. On the basis of said rewards, and a history there of, he is able to arrange an overdraft facility with his bankers, who we shall call C. Hoare d'oeuvre & Co.

For the next few months, Mr Shred does not need to use his overdraft facility, he maintains it merely for security. But, oh! Things have gone bad and he is now to be made unemployed. Mr Shred knows that he cannot afford to reasonably service this overdraft, but he needs the money. He then decides to spend the overdraft before his bank notices a downward trend in his credit turnover.

Has Mr Shred not borrowed irresponsibly, without the bank lending irresponsibly? C. Hoare d'oeuvre & Co. agreed the facility when Mr Shred was able to service it, and thus lent responsibly. Mr Shred, however, has then borrowed irresponsibly by not reporting his change in circumstances to his bank, and spending it all on whiskey and advice about pensions

But this is an AUTHORISED overdraft, is it not? This debate is about so-called unauthorised o/drafts, those that currently lead to the bank charges being discussed here. :? It is purely in that context that I made my comment about irresponsible borrowing/lending, sorry if that wasn't clear from both the title of the thread and the previous posts.

bookworm1363

BarclaysManager wrote: »

It is impossible to create a system where customers cannot go below zero, willfully or not.

How do you handle guaranteed cheques, offline card entries? I am yet to see you answer these issues in a valid way. Cheque guarantees are soon to go, but what of debit card transactions that do not hit instantly?

Banks can regulate for this in the UK to a certain extent, but you cannot regulate for this happening outside of the UK.

Give me a chance, I am still typing a reply to your previous post when you post the next one, I am not psychic, you know. :rolleyes:

... Although as it happens, I do believe I actually have answered in my last post. That was good timing.

Extant

bookworm1363 wrote: »

I think the guaranteed cheque is a bit of a red herring, tbh. One, most shops no longer accept cheques and I think we will see the total demise of the cheque system within the next 10 years at most.

It's an example of a guaranteed transaction, and they are still used by small traders.

I don't think they'll be around much longer either, and I've been fairly vocal on the subject - but your estimation of ten years is still a long time for fees to be levied, no? It bears full and proper consideration.

Card transactions under a floor limit, hmmm. Do tell me, what is it that makes the difference that up to a certain level of over-spending, a card will still go through, and yet to a higher level of over-spending, it will get stopped? Is it not that yet again, that infamous invisible ceiling goes in action?

I don't think you quite understand what I'm talking about. A bank is obliged by membership of the Visa scheme, for example, to honor certain transactions - in this example, those under floor limits.

A bank cannot return them, and I've never heard of any bank that has returned them. Typically, these charges represents goods or cash already given, so there is no basis for returning them.

Indeed, this is explicitly addressed by Barclays now - we no longer have an "invisible ceiling," you might have your overdraft (and Personal Reserve, if so desired) and then that's it. If you presented an "online" card purchase that would take you over your limit, it will decline. If an "offline" transaction feeds through, we must honor it and we will charge you £8 for doing so.

Although they no longer allow it at their end, Tesco formerly allowed basic debit card users to use their "pay at the pump" petrol services, which created "offline" entries - this resulted in not only our basic banking customers going overdrawn, but also those of other banks - the entries simply cannot be refused. The banks put pressure on Tesco to prevent this from happening, and now you cannot use said basic debit cards at Tesco pumps.

This "invisible ceiling" you refer to does not stop such things from happening.

In this day and age of instant transfers, are you seriously trying to tell me that any shop that wants to protect itself can not simply adopt a system fairly similar to the Faster Payments one? Come ON. Let's not look at the "this is the way we always have done things", let's look at "how can we make this work".

You want to replace the system of debit cards, as employed by... every country in order to prevent the few "offline" transactions that happen? Okay, maybe you can develop this scheme and encourage people to pay to participate, etc.

In addition, as I said, that's all very well and good for the UK - but what about internationally? (This point also ties in regarding the above ceiling limits etc.) I was in NYC on Wednesday/Thursday, and I withdrew $400 from a BoA ATM. At the time, I had sufficient funds, but due to international interchange etc., the debit did not hit my account until Friday. If I had spent further money, nearing my limit, do you think it would be reasonable for Barclays to say "no, sorry, can't have it" to BoA? Despite my having the cash?

But this is an AUTHORISED overdraft, is it not? This debate is about so-called unauthorised o/drafts, those that currently lead to the bank charges being discussed here. :? It is purely in that context that I made my comment about irresponsible borrowing/lending, sorry if that wasn't clear from both the title of the thread and the previous posts.

I replied primarily in response to the following:

bookworm1363 wrote: »

France recognises that there is no such thing as irresponsible borrowing without irresponsible lending, in other words, you can't borrow money you don't have without the bank's active complicity in letting it happen

That's a fairly straight assertion to me. As my example of Mr Shred highlights, it is entirely possible to borrow irresponsibly without the bank's active complicity or irresponsible lending.

glider3560

Another example of offline transactions would be when I pay for train tickets on the train or buy food on a plane. There isn't really a cheap way of getting authorisation for these transactions, so they are processed offline. If I spend money on a debit card which takes me over my overdraft, the bank must honour it and why shouldn't they charge me for this? After all, I've stolen their money.