Current Account Charges - Why I have no sympathy

Hereward

Tootsie_Roll wrote:

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

Then aren't you generalising, without taking each account holders circumstances into consideration? As I stated in my previous post, I do not see why anybody would want to abuse their account as they just get slapped with large charges, therefore making themselves worse off.

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

Account holders that maintain a positive balance are more likely to be better at money management, therefore, the bank, or building society, could sell them loans and mortgages (the account holder is more likely to pay them back); saving and investment products (the bank would be able to get better returns from the investment markets); assurance insurance products (the banks would be using the account holders own fears against them). Just because an account holder is good at money management does not mean that they are financially savvy: these are the ideal customers for the banks as it the areas where these customers are interested in where the bank can maximise its profits for a very little risk to itself (that is, the bank will get its money fairly easily).

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

I agree that I may be difficult for the banks, and building societies, to get people to sign up, but they could offer some sort of incentive to do so. Of course the bank/building society could turn a nice profit from these courses as they are a service.

Mark7799

Paul_Herring wrote:

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

But with the Bank account you have the option of filling it up before money is due out of it:p (can't find a 'tongue in cheek' smiley)

oldwiring

My sympathy is very limited because I have known folk on very short budgets who have struggled but still managed to conduct their accounts within the tems that they did not ecceed their available balances. They struggled because of theor honesty and self respect. IMO that is a commodity some who incurred charges are lacking.

Hereward

oldwiring wrote:

My sympathy is very limited because I have known folk on very short budgets who have struggled but still managed to conduct their accounts within the tems that they did not ecceed their available balances. They struggled because of theor honesty and self respect. IMO that is a commodity some who incurred charges are lacking.

This is exactly my point. The people you have described are reasonably good at money management because they understand what the can and, more importantly, cannot afford. As they are living within their means, if there was an unexpected event would you have any sympathy if they incurred some bank charges and then got stuck in a cycle, or are they then abusing their account?

Tootsie_Roll

Hereward wrote:

Then aren't you generalising, without taking each account holders circumstances into consideration? As I stated in my previous post, I do not see why anybody would want to abuse their account as they just get slapped with large charges, therefore making themselves worse off.



Account holders that maintain a positive balance are more likely to be better at money management, therefore, the bank, or building society, could sell them loans and mortgages (the account holder is more likely to pay them back); saving and investment products (the bank would be able to get better returns from the investment markets); assurance insurance products (the banks would be using the account holders own fears against them). Just because an account holder is good at money management does not mean that they are financially savvy: these are the ideal customers for the banks as it the areas where these customers are interested in where the bank can maximise its profits for a very little risk to itself (that is, the bank will get its money fairly easily).



I agree that I may be difficult for the banks, and building societies, to get people to sign up, but they could offer some sort of incentive to do so. Of course the bank/building society could turn a nice profit from these courses as they are a service.

Sorry but you're not really making sense to me now.

How can I be generalising about customers abusing their accounts when I have seen it happening day after day and why are their personal circumstances relevant ? We are not just talking about customers who are in financial difficulty

You can't see anyone doing it because it makes them worse off - how is that relevant ? It's just your opinion which whilst valid isn't backed up.

Also I still don't see how customers with positive balances are relevant to this topic, I was talking about customers who have their accounts closed after re-claiming charges.

westernpromise

as a point of principle the courts will not subsitute their own judgment in place of the parties' wishes.

Except of course that the parties wouldn't be in court if they were able to agree. At which point the court's view prevails.

It is important to remember that it is voluntary. They tell you what it will be in advance, and it is wholly optional.

I think we're going to have to agree to disagree on this one. The banks certainly agree it's optional, though; if you ask for it back, you get it. However, consider this example. You earn £1,000 a month; you spend £1,000 a month. One month, you are paid a day late and you go into overdraft by £1 on the last day of the month. The bank charges you £38 for this.

Next month you go into overdraft by £1 - less than the amount, and thus because of, the bank's charge last time. It charges you another £38, in effect for having previously been charged £38. Next month you are therefore £39 overdrawn, and - well, you get the picture.

In other words, all the charges are consequent upon the first one. Why should you pay?

Increasingly this is what happens, and will happen in any circumstance in which you have handed over your credit card.

Which does not, however, make it lawful. In essence what is happening is that banks are saying - "you broke my T & Cs and I want compensation". Because they control your money, they can simply help themselves; but if they did not, they would have to do what everyone else had s to do, which is take you to court and prove their loss.

What is happening instead is that they are being invited to return the money. If they want to, they could return the money, then take you to court and prove their loss so as to get it back.

So far, not one has done so.

The really damaging thing to the banks' position here is that they have a history of allowing accounts to remain open, and then milking them for charges over years and years. If these charges genuinely simply kept them whole, they would not do this. They'd close the accounts, because they're taking a risk and making no money.

Since they don't do this, one has to assume that they're doing it because the charges are profitable.

I'll tell you what would happen: most people would go to another bank,

So your contention then is that competition would prevail? Interesting - tell me, what evidence do you see of banks working to improve their efficiency, so that their charges can be reduced, and thus give them a competitive advantage? I see no evidence of "service" price competition among banks, do you?

Hereward

Tootsie_Roll wrote:

How can I be generalising about customers abusing their accounts when I have seen it happening day after day and why are their personal circumstances relevant ? We are not just talking about customers who are in financial difficulty

You can't see anyone doing it because it makes them worse off - how is that relevant ? It's just your opinion which whilst valid isn't backed up.

I define abusing an account as an act where the account holder tries to improve their situation by exploiting the account provider; therefore, as banks charge fees for exceeding overdraft limits and refusing standing orders and direct debits I cannot see how an account holder is abusing their account: they just end up losing in the end. I agree that this is my opinion, but you stated, in post #75 and above, that you had seen thousands of account holders abusing their accounts. I suggested that this is your opinion as you have not taken each account holders individual circumstances into account. I agree that not all people who incur charges are in financial difficulty (although it could be argued that they are, even if it is for a relatively short space of time).

Also I still don't see how customers with positive balances are relevant to this topic, I was talking about customers who have their accounts closed after re-claiming charges.

Again, in post #75, you mentioned that account holders that pay charges are profitable. I was just pointing out that account providers can make more profit from those who manage their accounts well than from those you manage their accounts badly. In addition to this the risk to the bank is smaller from the account holders who have better money management skills.

westernpromise

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 ?

Why did the bank not close the account after 2 or 3 infractions? Why does a bank keep a customer who is incurring lots of charges on which the bank is simply breaking even?

I'm not sure whether you're arguing that the customer deserves it, or that the charges are indeed their cost, or that the charges aren't their cost but that the seller should be allowed to fine its customer; but on all three points the banks appear oddly reluctant to fight even one case. If they did, it would deter many claims even if they lost. So why don't they?

Paul_Herring

westernpromise wrote:

It is important to remember that it is voluntary. They tell you what it will be in advance, and it is wholly optional.

I think we're going to have to agree to disagree on this one. The banks certainly agree it's optional, though; if you ask for it back, you get it.

I beleive you're misreading the OP quote - what was being cited as optional, was being in the circumstances where the banks feel that they can remove the money, not that the charge/fine/penalty itself is optional (though it is - banks will usually allow one infraction/period (usually a year) before actually applying them)

oldwiring

Hereward wrote:

This is exactly my point. The people you have described are reasonably good at money management because they understand what the can and, more importantly, cannot afford. As they are living within their means, if there was an unexpected event would you have any sympathy if they incurred some bank charges and then got stuck in a cycle, or are they then abusing their account?

TBH to live witin your means does not mean living up to your means. You have to live below it to avoid those rainy days having the effect of the great flood on your finances and that cycle you mention. If people have not been on the "must have now" bandwaggon, which IMO does not preclude in our society sensible approved borrowing, still fall in to misfortune, they have my sympathy and I hope they will get assistance with out too strong an eye on the bottom line from the provider. TBH in the greed of todya that may well be a pipe dream. What an amoral socirty we have made and are getting our come-uppance from:mad: