First Direct to charge £10 per month for current account

Xbigman

ZTD wrote:

You'd go back to being weekly paid. It's safer for the business.

It won't happen. Most people who have taken a job in the last 15 years have it in their contract how they are paid and at what frequency. Also the shear cost of insurance will stop any decent sized company from even contemplating it.

One other point. If most of those who have to pay the £10 leave it will have a limited impact on FD because those people are, by definition, the less profitable customers. If a lot of customers who would not pay the fee left on principal it would have an impact.

I also think a lot of the avoidance actions people are contemplating will be blocked eventually. I've seen posts about people putting £1 in a savings account. Eventually there will be a minimum balance to count as a second account. Likewise, there will eventually be a minimum spend on credit cards per month to qualify.

The only thing that doesn't make total sense is the fact they have set the minimum pay-in at a level above average wages in this country. I can only read that to mean they are serious about either getting their £10 per month or getting people to sign up to uncompetative 'other products'.

So how could this pan out?

What is your biggest financial expenditure? Your mortgage. So in future you'll bank with your mortgage provider to get the best mortgage deal, not, as FD would like, put your mortgage in the same place as your current account.
Regards



X

climbgirl

Xbigman wrote:

One other point. If most of those who have to pay the £10 leave it will have a limited impact on FD because those people are, by definition, the less profitable customers. If a lot of customers who would not pay the fee left on principal it would have an impact.

So how could this pan out?

What is your biggest financial expenditure? Your mortgage. So in future you'll bank with your mortgage provider to get the best mortgage deal, not, as FD would like, put your mortgage in the same place as your current account.

I have a sneaking suspcicion that this is what First Direct are trying to achieve - firstly, HSBC is testing the waters (their CEO is quite open about wanting to bring transactional fees to the UK), and secondly FD are trying to shed their customers who cost them money. As a general rule of thumb, 20% of a bank's customers cost them money, 60% make very little or no money for the bank and 20% are the customers who bring in the cash. Why not try and shed the bottom 20% to other rivals?

As for how it's panned out, you've hit the nail on the head. That's exactly what happened in Australasia when they introduced transactional fees. People started moving all their banking products to one provider to try and cut costs or get 'no fee' benefits by bringing their mortgage to the same bank as their current account. I fear this might make rate tarting pretty tough in the future....

climbgirl

Sorry, I worded that slightly incorrectly. I meant to say that people shopped around for the best deal on their mortgage, then moved all their other accounts to that bank because they'd be offered 'no transactional fee incentives' to have them all in one place.

Mrs_Sparkle

I'm sticking with FD at least for a while as I've just fixed my mortgage with them for 2 years. I can't blame them for wanting rid of the dormant accounts which presumably cost more in administration than they claw back in interest etc. but I think £1500 seems high- even though it is below the national average salary (just!).

I think I'll snap up that A&L cashback on Quidco before they all start charging though...

southernscouser

Mrs_Sparkle wrote:

I can't blame them for wanting rid of the dormant accounts which presumably cost more in administration than they claw back in interest etc.

What they say and what the truth is could be 2 different things?

ZTD

Xbigman wrote:

One other point. If most of those who have to pay the £10 leave it will have a limited impact on FD because those people are, by definition, the less profitable customers. If a lot of customers who would not pay the fee left on principal it would have an impact.

Oh, I agree - but I'd leave on principle. First this fee - which fee next? A fee for closing your account?

Mrs_Sparkle

southernscouser wrote:

What they say and what the truth is could be 2 different things?

That's true :rolleyes:

stevenevermind

Curlyz wrote:

Just heard on the BBC news - you do have to put in £1500 per month and keep above £1500 in you won't pay the charge and if you have more than 1 FD product - so you take out a credit card and never use it or open a savings account and keep just £1 in it you also avoid the charge

If we all open a separate savings account, put in the £1, this will means they have to manage twice as many accounts - hopefully this will hit them where it hurts in further admin costs - anyone else agree?

Kevicho

LONDON (AFX) - UK banks said they remain committed to free banking, despite the news that First Direct, the online banking arm of HSBC Holdings PLC, will start charging customers a monthly fee to use its current account.

First Direct's 1.3 mln customers will be charged 10 stg a month if they are unable to pay in 1,500 stg into their current account per month or maintain a monthly balance of that amount. They will not be charged the fee if they have taken out a mortgage or a credit card with the bank.

Banks contacted by AFX News said they would not follow suit.

"We are committed to free banking," said a spokesman at HBOS.

LLoyds TSB, Royal Bank of Scotland and Alliance & Leicester added that they had no plans to follow First Direct's lead.

Barclays PLC could not be reached for comment.

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To be honest, even after reading that it wouldnt surprise me if in the next 6-12 months more follow suit.

Such trust I have in our banking establishments

To be honest the best thing that could happen is a mass walkout, but either way just play them at there own game and get a cc with them.

I think at some point we wont have a choice to move, and if anyone says well the banks have to make money to recoup all the punitive fees people are recovering, then for record, that money was sheer profit, and this is more sheer profit

If interest rates were more balanced in terms of savings vs loans i think a small monthly fee may be justified

In_Search_Of_Me

I used to love first direct & still have an account with them...why? because I have a loan with them & they refuse to allow me to close the account! I was really upset when I got the letter as thought I'd have to transfer salary into it again & then straight out to avoid the fee (rip off). I just wish I had the money to pay off my loan & tell them where to stuff it but aint happenin now! Hopefully they'll realise that people are not happy (made the news all day!) and backtrack...would be interested to see their figures over the past/next year! Cust service is great but should have read the small print (story of my life!)..!