Answering bank charges skeptics: pls help....

flam147

Graham_Devon wrote: »

Even if you paid for your banking, the above scenarios would still leave you in the same position.

You'd just be charged to have the account in the first place.

IMO, and this is just me trying to help, you need to get some professional advice on your situation. None of this is the banks fault. Targetting the wrong people isn't going to help overcome the situation.

but when the debt is only bank charges you are being fined several times for 1 offence
if you are fined £40 by a court and you only have £20 a month spare they take £20 and then £20 next month

what do the banks do take the £40 but because you only have £20 fine you another £40 and on and on.

flam147

why did the banks payout and not disclose the costs to courts.? they know they should not do this. often a small debt of sometimes pennies is turned in £100's of pounds by the banks. if it was not for the goverment some of the banks would have bounced.

natweststaffmember

flam147 wrote: »

why did the banks payout and not disclose the costs to courts.? they know they should not do this. often a small debt of sometimes pennies is turned in £100's of pounds by the banks. if it was not for the goverment some of the banks would have bounced.

Flam, the basic issues some have maybe to do with perception.
For example, Bank Charges are the effect of an action. So for example, the cause of my hardship is hard cash ie I've lost my job, or I've lost overtime hours. Now I maybe quite cocky and think, I can survive on what I have yet I don't make additional adjustments so that night out to the pub with the lads continues and then payments start to bounce and I have incurred charges. The charges are the consequence not the cause which is important to remember.
With regards to banks paying out they did so as a gesture of goodwill and non acceptance of liability. The government action towards the banks is simply irrelevant to be honest since the OFT test case started prior to the recession and will end perhaps at the point where we have recovery.

pipkin71

krisskross wrote: »

However just one missed DD because of shortage of funds would cost far more than £5. Wouldn't know what cable charge as we can't afford it, freeview has to do for us.

I have direct debits set up so that I don't pay the charges - which I think are quite steep if those without DDs paid their bills on time.

Thankfully, I've never gone overdrawn at the bank, so never incurred any charges and can appreciate that if someone was regularly going overdrawn that the £5 a month payment is a cheaper option, but if you were to add all of the payments for not paying by DD, it can come to quite a bit.

My cable is on a package with phone and internet, which I have a very good deal on thanks to mse. It's actually cheaper to have the lot as a package than individually

pipkin71

esmerellda wrote: »

answers come back about paying by dd being cheaper - yes maybe by £5 a quarter or something - but surely if its a toss up between that or £35 charge each month from the bank...well I know which i would pick, and do !

Cable's actually £5 a month esmerellda, but I see your point.

I do think though, for those who were paying their bills on time, without a direct debit being in place, that these charges are quite steep.

I've just had a look at the consumer action group website, and there is a thread running on there about the charges for payment other than by direct debit, which I'm sure will be interesting for those having to pay the charge.

http://www.consumeractiongroup.co.uk/forum/general-consumer-issues/205578-important-pending-consumer-action.html

Just to add, I haven't read through it though.

esmerellda

That thread just shows CAG in its best light lol. (sorry)

The issue of charges for paying by methods other than DD has been talked about for a long time. The companies, some of them anyway, get around it by offering a discount to customers who do pay by DD rather than impose a penalty on those who don't (ie get £5 a month off if you pay by DD).

Telecoms
http://news.bbc.co.uk/1/hi/england/west_midlands/7319545.stm may be of interest - Ofcom were looking into the charges too - they came back with this in December 2008

• charges for non-direct debit payments should be clear, and limited to the actual cost of handling those payments;'

And this regarding energy providers - http://www.timesonline.co.uk/tol/money/consumer_affairs/article6543150.ece

MarkyMarkD

There's simply no reason at all why providers should not be allowed to offer discounts for DD payment. And charging a higher amount for non-DD payment is the same thing with a different name.

rolleypolleypud

I very rarly post on these disscussions about bank charges as with most things that involve disscussion some people will agree and some won't.

I hold my hands up and say that I have got into a mess with bank charges and I am just about getting myself straight now. I do not blame anyone for getting me into the mess and have taken full responsability in putting myself straight after many many months.

All I want to say is to those people whose attitude is well I have managed my account all my life and never been charged and it's your own faulty if you go over drawn and if the money isn't there then you shouldn't take it out.
Well yes in an ideal world this would be the case but I doubt many people who have gotten into diffeculty with bank charges one day say down and said I'm gonna take more money out of my account than there is in there so next month the bank can charge me.
Most people get into the snowball of bank charges from an event that has happened that is beyond there control for instance last month our boiler broke down leaving us with no hot water for us or our 2 children costing is £100 to get it fixed. We couldn't wait 2 weeks with no hot water until pay day. If you are a family that lives hand to mouth with no extra money to save every month and without the abbility to absorb a £100 bill you will enevetebly go overdrawn.

Yes ok its a first offense you could argue the bank will take it off if you give them a ring. Yes they very well might but what if you can not clear the £100 over draft all in one month? You can only afford to clear £30 the next month the bank is less willing to listen and so the charges start. You are still £70 over drawn but the bank then adds on there £25 charge taking you £95 overdrawn then the next month you manage to pay £50 off the over draft and taking you to £45 overdrawn but then another charge is added and so on and so on and so on.

Yes ok the banks need to charge for a service or penalise you for doing wrong but what is a fair amout? £25 to some my not be alot of money but to those who have very little in the first place it can be the difference between eating at the end of the month or going hungry.

Bank charges at present seem to be at a cost that is easy enough for those of us who are slightly better off to absorb but the poorest to be made a profit out of by charging such high amount in the first place that it is almost impossible for them to get of the slippery slope of charges apon charges.

If you are one of the fortunate people who have managed to run your accounts within credit all your life who have never been faced with an event or emergency that you can not at the time bugget for if you have never had to live hand to mouth then that is great and I do not believe you should be penalised with running account charges either. But please when you say things like well its your own fault you shouldn't have taken the money out in the first place please try and look at the bigger picture and not just slap us with the your irresponsable and it could have been avoided because I'm sure in a lot of circumstanses it couldn't.

Nathan_Spleen

MarkyMarkD wrote: »

The OFT's argument about interest foregone will be way out of date. The value to banks of interest foregone at the moment is next to nothing. And, personal current account profits are not very large at all even taking account of those. If any bank is making money out of personal current accounts at present, I would be surprised - they weren't making much PROFIT (not revenue, which is somewhat irrelevant) out of them when rates were significantly higher..

I would say that Net Interest Income is more profitable than you make out. The fact is we don't know how profitable it is for the banks as they never publish the information. But as NII is part of the 'price' of a current account it's odd that this 'price' doesn't feature in the bank's charging tariff when you buy a current account and doesn't sit too comfortably with the bank's 'free if in credit' claim.

MarkyMarkD

Interest foregone might be a cost, but it's not a realistic one to include in any form of terms and conditions because it depends on lots of things. It's also subjective - is it based on some form of standard transfer price, should it be simply set at BBR, or LIBOR, or whatever.

It does not take a lot of nous to work out that the average current account with an average balance of less than £500 (say) is worth about £2.50 to the bank in terms of interest foregone, calculated at 0.5% base rate. That's not anywhere near the cost of operating a current account.

Even at (say) 0.8% LIBOR, it's only £4 a year.

Honestly, anyone who finds issue with "free if in credit" due to interest foregone is clutching at straws. The credit interest rate payable on the account - whether 0%, 0.1% or something larger - is clearly stated, and there is no hidden charge.