Current Account Charges - Why I have no sympathy

oldwiring

MPH80 wrote:

Good post YB ... but ...

Salary for the clerk is nowhere near £20k. I had a house mate working for Natwest as a small business advisor. Before commission - he got £13k. That was 4 years ago though.

M.

Clerk needs managemant supervision, equipment, premises to work in. Equipment has to be maintaned as do premises. Businesss rates have to be paid, All and more have to be factored in to the operational costs.Banks are not some corner sweet shop,

inmypocketnottheirs

oldwiring wrote:

Clerk needs managemant supervision, equipment, premises to work in. Equipment has to be maintaned as do premises. Businesss rates have to be paid, All and more have to be factored in to the operational costs.Banks are not some corner sweet shop,

No but yeah but no but....

All of these are establishment costs, and have contributive overhead costs. Unless of course, you expect that these punitive fines alone should bear the total cost of providing a banking service????

The true fact is the cost of a bank returning an item unpaid is absolutely negligble.

The only fair way IMHO is to apply teired bank charges that charges for bank services, i.e. cheques, deposits, withdrawals, cash card useage, direct debits, standing orders etc etc, by charging according to a monthly average cleared balance.

Tim_L

These charges are levied to generate profit - there's really no question that a bank would actually do a manual review and charging what it costs (and demonstrating what it costs) because this would not add anything to the bottom line.

The banks have no extra costs if someone is £5 over a limit or £5 under it and there is no increased risk of default to them, so there is really no need for a review except when there are serious transgressions in which case you would expect all transactions to be stopped. There are perfectly good lawful ways of discouraging minor transgressions which are also fair - increased interest rates and so on which only apply while the default is active, which is often less than 24 hours while a payment clears. Unfortunately such systems generate far less money for the banks.

Unfortunately there is a group of people who seem to be convinced that there is another group who are massively abusing the system to their detriment. It seems not to matter how authoritative the people pointing out the legal and financial situation are - Westernpromise for example - they are getting hung up completely on the idea that companies are allowed to charge what they want for products and services (they can, but these charges are fines), and that they ought to have their own banking subsidised by charges imposed on other users who have the temerity not to manage their accounts as "well" as they do.

There is also the crazy notion that people being charged would somehow be dumped by the banks and told to find basic bank accounts if charges are abolished. This is a complete nonsense: someone paying an overdraft rate is an ideal customer for a bank because they generate regular interest income and can also be targetted for loans. The banking industry is hardly going to turn its back on its most profitable customers.

Tootsie_Roll

Tim_L wrote:

These charges are levied to generate profit.

So speaks the Oracle ! Everyone can go home now Tim L has spoken. :rolleyes:

Tim_L wrote:

The banks have no extra costs if someone is £5 over a limit or £5 under it and there is no increased risk of default to them.

Of course they do - that's the whole point ! :rolleyes:

Tim_L wrote:

Unfortunately there is a group of people who seem to be convinced that there is another group who are massively abusing the system to their detriment.

There are - again that's another very salient point - As alexjohnson points out - it's very Guardian reader to simply assume it's only the poorer that incur these charges.

Tim_L wrote:

It seems not to matter how authoritative the people pointing out the legal and financial situation are.

As I've mentioned to you previously - I have personally seen thousands of accounts that have been abused by the account holder. How much authority/experience is enough for you ?

Tim_L wrote:

There is also the crazy notion that people being charged would somehow be dumped by the banks and told to find basic bank accounts if charges are abolished.The banking industry is hardly going to turn its back on its most profitable customers.

But if its the same people who have just reclaimed hundreds or thousands of pounds back then they're hardly profitable any more are they ? I'm not aware of banks dropping all customers who incur charges - has that been stated somewhere or are you just misunderstanding the situation again ?

In fact I'm hoping all banks start dropping these people as quickly as possible and that they then have trouble either repaying their overdrafts back on demand or getting anything more than a very basic account elsewhere.

Hereward

Tootsie_Roll wrote:

As I've mentioned to you previously - I have personally seen thousands of accounts that have been abused by the account holder. How much authority/experience is enough for you ?

Are you 100% sure that everyone was abusing their account's and not bad at money management? I find it hard to believe, but stand to be corrected, that there are so many people abusing their accounts, especially as the bank just takes their charges straight out of the offenders’ accounts.

But if its the same people who have just reclaimed hundreds or thousands of pounds back then they're hardly profitable any more are they ? I'm not aware of banks dropping all customers who incur charges - has that been stated somewhere or are you just misunderstanding the situation again ?

Surely account holders that maintain a positive balance are more profitable, especially as the banks, and building societies, can "sell" them their higher profit margin services with a smaller risk.

In fact I'm hoping all banks start dropping these people as quickly as possible and that they then have trouble either repaying their overdrafts back on demand or getting anything more than a very basic account elsewhere.

If the banks (and building societies) offered, for a fee, a money management course for repeat offenders would help those with poor money skills escape the charges trap, and hopefully make them even more profitable and lower there risk to the bank. Just getting rid of those who incur charges will eventually mean that everyone will have to pay a fair price for their accounts (this is probably a good thing).

Hereward

alexjohnson wrote:

Increasingly this is what happens, and will happen in any circumstance in which you have handed over your credit card. Penalty rates for filling up rental cars come to mind. Doubtless many people would assert that these are "unair" and out of all proportion to costs.

I disagree that car hire companies filling up hire cars is a penalty fee. When you rent the car, it has a full tank of fuel. You are asked to return the car in the condition it was lent (on return the contract between the two parties end): the car hire company offers a fuel refilling service that the charge a premium for. I agree, however, that the use of this service is completely optional though.

Mark7799

Hereward wrote:

I disagree that car hire companies filling up hire cars is a penalty fee. When you rent the car, it has a full tank of fuel. You are asked to return the car in the condition it was lent (on return the contract between the two parties end): the car hire company offers a fuel refilling service that the charge a premium for. I agree, however, that the use of this service is completely optional though.

Interesting argument - if it doesn't cost the higher company that much to fill the car up and they charge you a set fee regardless, aren't they profiting in the same way the Banks are?

Tootsie_Roll

Hereward wrote:

Are you 100% sure that everyone was abusing their account's and not bad at money management? I find it hard to believe, but stand to be corrected, that there are so many people abusing their accounts, especially as the bank just takes their charges straight out of the offenders’ accounts.

Yes - 100% sure, why else would I have so little sympathy?

Hereward wrote:

Surely account holders that maintain a positive balance are more profitable, especially as the banks, and building societies, can "sell" them their higher profit margin services with a smaller risk.

I'm unsure how positive balance customers are affected as it's unlikely they will incur charges.

Hereward wrote:

If the banks (and building societies) offered, for a fee, a money management course for repeat offenders would help those with poor money skills escape the charges trap, and hopefully make them even more profitable and lower there risk to the bank. Just getting rid of those who incur charges will eventually mean that everyone will have to pay a fair price for their accounts (this is probably a good thing).

Well nice idea but highly unlikely that many people would take up their offer and how would they pay the fee ?

Hereward

Mark7799 wrote:

Interesting argument - if it doesn't cost the higher company that much to fill the car up and they charge you a set fee regardless, aren't they profiting in the same way the Banks are?

No, they are providing you with a service, supplying fuel, therefore that can charge what they like for it (and it’s the price per litre that is fixed, not the fuel charge). You could use the local filling station and pay their prices, which will almost always be less than the hire companies. With Bank charges you have no choice but to pay them, as you can't suddenly decide to swap banks at the last moment (and there is no guarantee, if you could swap that a different bank would offer you the same Overdraft, etc.).

Paul_Herring

Mark7799 wrote:

Interesting argument - if it doesn't cost the higher company that much to fill the car up and they charge you a set fee regardless, aren't they profiting in the same way the Banks are?

Surely with the car, you have the option of filling it up yourself before returning it, thus avoiding the extra payment?