End of free banking..

AnonymousForObviousReason

Okay two separate points here:
a) Banks were wrong to charge what they did (morally and/or legally).
b) People shouldn't expect to borrow money for free. For a number of years people have been living beyond their means (aided by cheap credit), the situation has changed people will need to downsize their spending and accept they can't get everything now or be prepared to pay for it over the long term.

jonesMUFCforever

vaporate wrote: »

That should cut both ways with savers like me...

Does it?...HA!

4% with LTSB on a current account without any charges as long as you put in a grand a month (interest on balances up to £7k).
The money only has to go in and does not have to stay there.

vaporate

I hope interest on savings across a few banks rise soon.

davidgmmafan

"If you want to borrow THEIR money then you have to pay"

Agreed, same argument as bank charges applies though. Should there be A charge? Absolutely. Should that charge be whatever the bank wants it to be? Maybe, or maybe there should be some limit...

On the overdraft charge thing I think in the long run the banks may be shooting themselves in the foot. If £5 + interest makes people think twice and pay it off great the banks will have more money, but then they won't be lending that same money out at 18% or whatever the rate it.

On the whole I agree there NEEDS to be a change in the way people view overdrafts. Lets not pretend that individuals are wholly to blame for they don't exist in a vacuum. Banks specifically targer people when they are young with FREE overdraft and INTEREST FREE credit cards to get them used to using such things for free. Then when they start to charge the behaviour pattern is already established.

YorkshireBoy

davidgmmafan wrote: »

On the overdraft charge thing I think in the long run the banks may be shooting themselves in the foot. If £5 + interest makes people think twice and pay it off great the banks will have more money, but then they won't be lending that same money out at 18% or whatever the rate it.

I don't entirely follow your logic here.

People who use overdraft facilities, either regularly each month or even constantly in many cases reported on here, will be deemed high risk by their banks. High risk customers are, indeed, offered loans at circa 18% APR and credit cards at even higher APRs.

See the similarity (and the revenue stream maintenance)?

Furthermore, they're 'guaranteed' to have the debts serviced/reduced each month due to the monthly payments required by such credit cards and loans. Overdrafts generally have no monthly servicing/debt reduction requirements.

Loughton_Monkey

All banks have to earn a crust. The way they do it has changed over the years, and differs from bank to bank. It can be monthly account charges, draconian O/D fees, selling you Insurance and other add-ons, providing a derisory Interest rate, pushing special deals on one product, provided you buy the shabby product as well.

As consumers, it's up to us to earn a crust too. This is where sites like this are of value. We must learn to be equally agressive, and switch from one to the other as we see fit. Personally, I have 30 accounts, spread across 14 banks. All of them, with a few exceptions, have a purpose, such as best ISA rate, good monthly saver rate, better interest but no faster payments, slightly worse interest, but faster payments, notice accounts, longer term bonds, etc.

It's good to have several current accounts too. Personally, I don't use overdrafts, but if I did, and was getting hassle, I'd just switch over to another one.

flamingo16

I have been a customer of Lloyds for over 35 years. I went to my local branch recently to reduce my overdraft allowance and was told about the £5 monthly overdraft charge,ie, any overdraft over £10 would incurr a £5 charge as well as the overdraft interest of 19.5% on the amount overdrawn wef October 2010. I was persuaded to open a credit card account so that any amount overdrawn each month could be transferred from the credit card account to my bank account to keep my bank account from going overdrawn! My State Pension and Pension Credit are paid weekly to my bank account and my other small pensions are paid monthly so sometimes I do go overdrawn because of the monthly direct debits set up on my account. The interest charged for this facility is fine with me but to add a £5 monthly charge as well is just being greedy. My solution is to switch to the Co-operative online bank Smile, as recommended by MSE. I now have a new bank account and my DDs and SOs are to be transferred shortly. I have cancelled the credit card agreement.

Flamingo16

davidgmmafan

YorkshireBoy wrote: »

I don't entirely follow your logic here.

People who use overdraft facilities, either regularly each month or even constantly in many cases reported on here, will be deemed high risk by their banks. High risk customers are, indeed, offered loans at circa 18% APR and credit cards at even higher APRs.

See the similarity (and the revenue stream maintenance)?

Furthermore, they're 'guaranteed' to have the debts serviced/reduced each month due to the monthly payments required by such credit cards and loans. Overdrafts generally have no monthly servicing/debt reduction requirements.

It has been suggested by some that the current Halifax charging structure is to get rid of these pesky overdraft customers. The thing is the bank makes a handsome mark up from these customers. That is the point I was making.

So yes people repaying thier overdraft will shore up the banks balance sheet in the sense that they have more money in the kitty, but then when its lent out again its unlikely to be at a rate comparable to the overdraft rate.

I would agree wholeheartedly that people shouldn't be in their overdraft constantly or even every month. However its not just customers that are to blame. Banks have let thier behaviour occur for YEARS, so this deathbed conversion I view with a bit of cynicism if I'm honest.

It would've had more legitimacy if they had actually REVIEWED customers overdraft arrangements like they are supposed to and made small decreases if people were not using it properly. Instead they thought we can make some money here, lets shaft them.

mungo_55

For me its the fact they're charging you a high rate of interest on the overdraft amount plus the £5 a month. I hope a lot of people ditch them as I just think its a bit bloody greedy. I can see they've been made to get rid of a lot of unreasonable charges in other areas, so are looking to replace some of that money this way.

I very occasionally go a bit into the red, and I'm going to be mighty miffed if I go £5 overdrawn and get charged £5 for it. Personally, I'm starting to look around for another account after having been with Lloyds for 20 years.

Fiddlestick

mungo_55 wrote: »

For me its the fact they're charging you a high rate of interest on the overdraft amount plus the £5 a month..

You're missing the point that due to having to cover the *potential* liability, they cannot lend that money out to people at a more profitable rate.

By having an overdraft you are limiting the scale at which the bank can carry out longer term lending with which to make money.

Your charges are designed to cover that loss of revenue.