The other side of the coin: The case for bank charges

payless

penalty clauses - surely at some point the banks will be allowed to set a figure , and say .. this is it ... take it or leave it.

Like the idea of Fee ... but refunded if account well maintained... that might get around the "penalty" clause

Nick_C_4

Is it infact selfish to claim back charges, bearing in mind that if people keep doing it is going to lead to other people having to pay for your mistakes?

But if bank charges are reduced to reflect the cost of the mistake, then people who incur charges are still paying those costs - they are NOT being subsidised by others.

I take the point made by MPH80 that there's a whole web of cross-subsidies going on in all businesses, so only charging for the cost of mistakes will result in that web of cross-subsidies being adjusted. But the way I see this is that those people who receive heavily-subsidised banking services will not be so heavily subsidised going forwards. I don't see this as unfair. We had a good run, but that doesn't mean it's unfair that it ends.

One of the biggest cross-subsidies will still remain: current accounts tend to offer free banking because it enables a bank to get hold of customers they can then market further (profit-making) products to.

I don't pay bank charges very often, by the way.

Turning_into_scrooge

OK so if these charges are practically acceptable then why will the banks not publish a full itinerary of what the charge entails? Until the banks are willing to prove the charge is viable then the banks will lose out on refunding charges, shot themselves in the foot. cuts both ways and this is an argument that will never be resolved.

furndire

Surely by now if the banks could prove that there charges were fair, they would have done so .
They say that the cases are too expensive to defend in Court. It would have been a lot cheaper than the nearly 4 million that people have already claimed back through CAG alone.
Also why do they try to gag people with confidentiality clauses - so people who naivly think banks are bigger than and wiser than me so they must be right"
The banks are just greedy - no-one would have probably complained if the amount were a fiver or so, as on the Continent - but a days wages for going slightly over limit, I don't think so!!! or in another context, taking half a weeks benefit from a single parent for going £2.50 over because a direct debit was taken out a day early- I don't think there is anyone who has an ounce of common sense can agree to that.

Call_Centre_Monkey

Some of you are missing the point. Just say, for instance, the charges are definately unlawful and shouldnt be as high as they are. The bank will simply increase interest/charge on other things in order to get it's revenue back up to the same rate.

This isn't an argument about how lawful the charges are, it's about what will happen in practice if charges do come down.

eslick

Look at the facts on charges from the banks point of view, they currently charge you if you go overdrawn, pay late etc. Well thats may or may not be lawful but the fact is that you borrowed money and a charge needs to be made. However for having a current account you get in most cases very small levels of interest. Dont think the money stays on your account when you arent using it, the banks are investing on the money markets every penny to make them lots of money.

If you need another service that helps you the bank charges extremely high levels of charges, for example CHAPs payment you are charged any where from £20 to £35, the company I work for are charges less than £2 for the same type of payment and the banks still make money out of us.

It takes days for cheques to be cashed, new regulations give you interest after 2 days but the funds only after 4 days. When you transfer between banks the banks hold on to the money for atleast a day before entering it to the clearing system.

Look at the way interest rate rises are passed onto savers.

Banks make money out of every transaction and penny you give them. Just look at the profits from the big banks. Fee charging current accounts are a simple way of the banks increasing their profits and in FDs case at the minute at the expense of those that can afford it the least.

JohnPeard

eslick wrote:

When you transfer between banks the banks hold on to the money for atleast a day before entering it to the clearing system.

Of all the 'gripes' I have, this is by the far the main one for me.

At no point, in any of my 'T&Cs' have I given permission for banks to use any funds which should be in my account, not theirs.

Banks justify UOD charges, because they say we are using their money without permission. But this cuts both ways.

These transfer delays are completely artificial. When banks then charge hefty penalties - £65 in a recent incident - claiming that the funds are not in the account, then these charges are not just punitive and excessive, they amount to theft.

Sorry, but I get quite sickened by many of the apologists for the banks out there who claim that the way banks work is transparent and ethical. I believe they act in certain circumstances amorally and totally unscrupulously.

Hereward

eslick wrote:

Look at the facts on charges from the banks point of view, they currently charge you if you go overdrawn, pay late etc. Well thats may or may not be lawful but the fact is that you borrowed money and a charge needs to be made. However for having a current account you get in most cases very small levels of interest. Dont think the money stays on your account when you arent using it, the banks are investing on the money markets every penny to make them lots of money.

If you need another service that helps you the bank charges extremely high levels of charges, for example CHAPs payment you are charged any where from £20 to £35, the company I work for are charges less than £2 for the same type of payment and the banks still make money out of us.

It takes days for cheques to be cashed, new regulations give you interest after 2 days but the funds only after 4 days. When you transfer between banks the banks hold on to the money for atleast a day before entering it to the clearing system.

Look at the way interest rate rises are passed onto savers.

Banks make money out of every transaction and penny you give them. Just look at the profits from the big banks. Fee charging current accounts are a simple way of the banks increasing their profits and in FDs case at the minute at the expense of those that can afford it the least

All account providers must hold at a set percentage of money deposited with them as a cash reserve, which does not earn the provider any money. This reserve must be maintained daily; therefore, if the amount of deposits increased so does this reserve and vice versa.

The delay in announcing rises in the interest rates on savings can be down to many factors, for example, waiting to see what their competitors are going to do and the expected return of their investments (loans, mortgages, stocks and shares, etc).

Account providers do not make big profits, they make a reasonable one when you compare it to their turnover, it just happens that both of these numbers happened to be very large numbers. If account providers only made hundred’s of millions on the same level of turnover, most of them would exit the market fairly quickly as their capital could be better used.

Hereward

JohnPeard wrote:

Of all the 'gripes' I have, this is by the far the main one for me.

At no point, in any of my 'T&Cs' have I given permission for banks to use any funds which should be in my account, not theirs.

Whilst this is true, you expect the banks to hold your money for "free" and actually pay you for the privilege (interest). If you do not like the way that banks attempt to earn this interest for you, then you could always keep for money under your mattress or in a disused teapot.

YnotL

Call_Centre_Monkey wrote:

Some of you are missing the point. Just say, for instance, the charges are definately unlawful and shouldnt be as high as they are. The bank will simply increase interest/charge on other things in order to get it's revenue back up to the same rate.

This isn't an argument about how lawful the charges are, it's about what will happen in practice if charges do come down.

This has happened with my Morgan Stanley credit card. I've never missed a payment. However my terms and conditions have changed, the standard apr has risen from 16.9% to 23.9 % and the maximum they charge for a missed payment has dropped to £12. It's not hard to work out what's going on there.