Fed up with unreasonable overdraft charges?

Premier_2

Help is on the way to all those who feel their bank charges them unreasonable overdraft fees.

As per Martin's guide to reclaiming bank charges, he says the best way to avoid bank charges is not to incur them in the first instance.

Virgin, who has acquired private bank Church House Trust, is going to offer personal current accounts without unreasonable overdraft fees. The account should be available later this year.

Unlike Santander's zero account, it is understood that there will be no tied products (like a mortgage) and that there will be no minimum monthly credits.

Good news?

Well for some perhaps. The drawback is that they will be charging every customer a current account fee regardless.

Is this perhaps the start of the end of free personal banking?
Well done everybody!!! :doh:

http://www.bankingtimes.co.uk/08032010-virgin-opts-for-monthly-current-account-fee/

dunstonh

Is this perhaps the start of the end of free personal banking?

No. Virgin financial products tend to be quite poor value for money. For example, their ISAs and stakeholder pensions are amongst the worst you can buy.

Where they gain is that they have a loyal following. A client bank that seems to think that Virgin offers them value without checking whether they really do.

I suspect they will get enough people to call it a success and be profitable. They wont be interested in the bad accounts and will aim to cherry pick the decent account holders.

Premier_2

dunstonh wrote: »

No. Virgin financial products tend to be quite poor value for money. For example, their ISAs and stakeholder pensions are amongst the worst you can buy. ....

What makes you say that?

They are certainly not the best buys, but I don't think it's fair to say they are the worst you can buy.

e.g. their deposit account pays average rates ... which admittedly is only 0.1% whilst the BoE rate is just 0.5%

Their ISA's and stakeholder pensions cost about 1% which again is average for a tracker. (many charge more). I'd also argue that their tracker fund appears to perform a lot better than many actively managed funds do


As for cherry picking the best current account customers, I suppose that depends on what you would call best. If best is those who pay the biggest fees (and so help produce the profit) then that'll detract from the other banks so possibly force them to introduce service fees.

If best is described as those who don't currently pay fees, then I'm not sure Virgin will attract may of those unless their competitors introduce similar fees.

natweststaffmember

Surprisingly, I know someone who's name I cannot divulge because I most certainly do not have permission to do so who did tell Richard Branson, I believe, that the best way to get a good foothold in the PCA market was to offer what it appears that they are offering. My conversation happened with the unnamed person was a few years ago, lol. Interesting times ahead perhaps.

dunstonh

What makes you say that?

They are certainly not the best buys, but I don't think it's fair to say they are the worst you can buy.

They are not the worst possible option but for the limited funds they offer and the high cost they offer them at, they are the worst. Especially the stakeholder pension.

Their ISA's and stakeholder pensions cost about 1% which again is average for a tracker. (many charge more). I'd also argue that their tracker fund appears to perform a lot better than many actively managed funds do

Their stakeholder is 1% for a nil advice contract when nil advice stakeholders elsewhere are 0.5% or lower. Their tracker funds typically perform at below table and are about 5 times the cost of equivalent trackers.

Premier_2

dunstonh wrote: »

...
Their stakeholder is 1% for a nil advice contract when nil advice stakeholders elsewhere are 0.5% or lower. Their tracker funds typically perform at below table and are about 5 times the cost of equivalent trackers.

It is true that some trackers elsewhere charge as low as 0.5%, but I'm sure you are aware that not all trackers are the same.

Before I used Virgin (before they were available) I had a L&G PEP (still have it); it charges 0.5% but it uses a sampling technique to try to replicate the FTSE rather than Virgin who buy shares in every company and therefore more closely replicates the index. This is important, especially in recent years when the market was falling, as dividends on shares held made up an important part of what was otherwise a depreciating asset. If you are not holding the shares (or at least the right ones) you won't get the divi's.

Edit: as for Virgin being 5 times the price of most other trackers, I suggest not. When Virgin entered the market, their 1% charge was one of the lowerst, and whilst other companies have had to reduce fees to compete, most trackers are still in the region of 0.25% - 1% annual charge (but bear in mind that not all trackers are the same as described above) HSBC offer one at 0.25%, L&G is now 0.65% (but total annual expenses are 0.82%) and Scottish Widows are 1%

Edit 2: actually most of those charges are for FTSE 100 trackers, but FTSE all share ones are similar. HSBC is 0.25%, but Scottish Widows is also 0.25% (or 0.36% total charge) - either way not 1/5 of Virgin's charges. Halifax charge 1.5% total annual expense.

chipbeck

Premier wrote: »

Help is on the way to all those who feel their bank charges them unreasonable overdraft fees.

As per Martin's guide to reclaiming bank charges, he says the best way to avoid bank charges is not to incur them in the first instance.

Virgin, who has acquired private bank Church House Trust, is going to offer personal current accounts without unreasonable overdraft fees. The account should be available later this year.

Unlike Santander's zero account, it is understood that there will be no tied products (like a mortgage) and that there will be no minimum monthly credits.

Good news?

Well for some perhaps. The drawback is that they will be charging every customer a current account fee regardless.

Is this perhaps the start of the end of free personal banking?
Well done everybody!!! :doh:

http://www.bankingtimes.co.uk/08032010-virgin-opts-for-monthly-current-account-fee/

I've got an account with the Co-op Premier which has the basics with no overdraft. I would assume this would help people who like me aren't very good with money.
I appreciate your sorrow at the thought that one day you may have to pay for the service from your bank and apologise for my part in this coming about.
Hopefully you can take some heart from the fact that whatever you end up paying it will be a pittance compared to the amount plonkers like me have paid over the years.

confused90

Premier wrote: »

Is this perhaps the start of the end of free personal banking?
Well done everybody!!! :doh:

it could of course be argued that for the millions who incured bank charges that banking was never really free in the first place.

I would change your question to;

"is this perhaps the start of the end of the poorest members of society footing the bill for all uk personal banking? Well done everybody :j :beer:

chipbeck

Sorry ignore my last post everybody as I think Premier has put me on his 'Ignore List'.

chipbeck

confused90 wrote: »

it could of course be argued that for the millions who incured bank charges that banking was never really free in the first place.

I would change your question to;

"is this perhaps the start of the end of the poorest members of society footing the bill for all uk personal banking? Well done everybody :j :beer:

Welcome to the ignore list mate. Old Premier ain't to keen on this type of view.

confused90

chipbeck wrote: »

Welcome to the ignore list mate. Old Premier ain't to keen on this type of view.

whether he's keen on it or not he can't prevent my view being put accross in this forum, if he did add me to his ignore list it would only mean he doesn't see it, everyone else will and i think my point is valid and more accurate than his assumptions that we will all be worse off if free banking is lost (which it won't be).

Would i be worse off with fee paying accounts that don't charge unauthourised overdraft fees?, well, lets say over the last 18 months if i'd had an account where i had to pay around £6 per month (what i actualy used to pay by choice to natwest) but in return i got zero bank charges for unauthourised borrowing i could have had 50 years of fee paying banking for what i paid in the last 18 months, sounds like a money saver to me.