Why do Banks try so many tricks?

Linton

verntern wrote: »

I know I have answered my own question! To make as much money as possible from our savings. Banks and Building Societies use the internet to promote savings accounts with trickery! 'Bonus' rates that rely on you, as the customer, to remember the expiry date. Sometimes, new accounts 'not available' to existing customers who have been loyal. Particularly with ISA transfers. Expensive 'customer service' phone numbers. Difficult to find your current interest rate on their websites. All designed to accept your savings and hope that you forget where and when you trusted your savings with them. Chuckle, I guess the situation is better than transferring savings to under the mattress.

I guess it's simple market forces rather than a grand conspiracy. Any bank that didnt do this would lose out to those that did because most people simply go for the headline offer, an offer which would not be financially viable without the tricky claw-backs.

thenudeone

They are just offering what the public have proved they prefer.

If fonecorp ltd offered 2 phone deals:
1) phone plus 2 years of free calls (say 10 hours a month) for a £450 one-off cost
2) "free phone" with 2 years of free calls (say 10 hours a month) for £20 a month line rental (minimum 2 years)
Which do you think they would sell many many more of?

Some recent research shows people perceived the difference between 95 and 100 as a bigger proportion that the difference between 9.5 and 10!

You can't blame the banks for human psychology.

As long as the terms are clear at the outset and a reminder is given at the end of the deal, it's a consumers choice whether to use them or not. There are some institutions which pride themselves on consistent straightforward rates rather than bonuses. They never appear on the best buy tables but you can choose them if you prefer.

2sides2everystory

Banking tricks are among the lowest forms of human psychological exploitation. The problem is threefold:
(1) the banks will try any tricks that work in their favour that they not immediately prevented from trying or are not made to stop and which they feel they can get away with. In that respect they behave a little like Ryanair, but perhaps unlike Ryanair, they constantly justify their actions by referring to how their competitors operate in the same way.
(2) the standard of education of the younger masses who form part of the banks customer base in the UK is abysmal in terms of both simple mathematics and in terms of what they accept in abuse from organisations such as banks - most of them have grown up thinking that if there are tricky Ts&Cs then thats just how it is. The first tricky Ts&Cs they experience are the mobile phone contracts their parents complain about, and after that, banks are no surprise.
(3) the standard of general education of older customers is perhaps better but in terms of financial services the older you are the more likely you will be exploited for treating your bank how you have always treated them i.e. reluctance to change banks or shop around, and a totally ill-founded belief that the staff at bank branches are there to help compounded with the misplaced trust that is put in them to offer financial advice.

This all leads to the consumer generally getting a pretty poor deal from banks currently and you can certainly blame the banks for that

asc99c

I don't quite understand why so many people complain so much about the profits made by the banks, whilst generally doing nothing about it.

My brother has one of the basic bank accounts that pays 0.1% interest, and when he goes overdrawn, charges a fairly significant rate of interest. There are better bank accounts around, but he won't switch. He's hardly on his own there. And as I write this there is an advert on TV for Lending Stream offering loans with an APR of 3042%. I somehow can't blame myself for banks taking advantage of the sheer laziness of many people when it comes to finance.

Loanranger

A genuine question : why do some people lump the building societies in with the banks when throwing around accusations of trickery, huge bonuses and generally unethical behaviour?

The mutuals are in a different league to the banks and generally pledge to treat their customers fairly.

Milarky

asc99c wrote: »

I don't quite understand why so many people complain so much about the profits made by the banks, whilst generally doing nothing about it.

My brother has one of the basic bank accounts that pays 0.1% interest, and when he goes overdrawn, charges a fairly significant rate of interest. There are better bank accounts around, but he won't switch. He's hardly on his own there. And as I write this there is an advert on TV for Lending Stream offering loans with an APR of 3042%. I somehow can't blame myself for banks taking advantage of the sheer laziness of many people when it comes to finance.

An interesting question - people are both hacked off and unwilling to make changes at the same time. I recognise 'cognitive bias' at work behind these contrasting responses - you at once feel 'threatened' (or made less 'secure') by a piece of information made known to you - but then your own mental 'defences' (some 'friends', those!) come to your aid to stop you doing anything about it - sort of 'wishing away' the perceived difficulty.

But this just creates a cycle of discontent doesn't it? Each time through 'the washer' [think DM blaring headlines] a person feels more conflicted - because they can't make the change to a more constructive outlook - and virtuous cycle - instead.

At least it sells 'newspapers'...

opinions4u

Loanranger wrote: »

A genuine question : why do some people lump the building societies in with the banks when throwing around accusations of trickery, huge bonuses and generally unethical behaviour?

The mutuals are in a different league to the banks and generally pledge to treat their customers fairly.

A typical building society chief executive earns a higher salary/bonus package per customer than a bank chief executive.

A quick glimpse at Natonwide's web site identifies a number of accounts with introductory bonus that will drop on to a poor rate after a short time. I don't think you'll find many Nationwide savers who feel that their building society has been a virtuous institution providing high savings rates.

Moving on to the Skipton's web site and I find an account for maturing term deposit funds to get shunted in to paying a stunning 0.3%. They also have several short lived offers that get "backbooked" and occasional rate reductions that seem to be hidden away.

KRBS (Kent Reliance) believe in providing value to their local communities. Their sporting sponsorships involve Gillingham FC, Charlton Athletic and Kent Spitfires cricket. They offer supporters a stunning rate of 0.10%.

Don't tell me the building societies are whiter than white. It simply isn't (in the majority of cases) true.

Loanranger

"A typical building society chief executive earns a higher salary/bonus package per customer than a bank chief executive."

What strange logic. By your definition the Prime Minister should earn how much given the UK's population of 62m? Or the Chief Exec of Birmingham City Council? Or a nurse?

Building societies need to pay the going rate to ensure they can attract and retain the necessary skills to run a multi location, highly technological operation safely handling billions of their customers' money. Don't forget that at this level these people have numerous choices of who they work for and where they work. The competition for their skills is considerable.

Your choices of the Kent, Nationwide and Skipton were highly selective.

So, on balance, do you prefer to entrust your money to a bank or a building society, given your poor opinion of some of the mutuals?

dunstonh

So, on balance, do you prefer to entrust your money to a bank or a building society, given your poor opinion of some of the mutuals?

Neither has any moral high ground over the other.

opinions4u

Loanranger wrote: »

"A typical building society chief executive earns a higher salary/bonus package per customer than a bank chief executive."

What strange logic. By your definition the Prime Minister should earn how much given the UK's population of 62m? Or the Chief Exec of Birmingham City Council? Or a nurse?

You raised the issue of high remuneration packages in banks. I responded by explaining that many mutuals pay rather well too, despite in most cases being significantly smaller organisations. (This isn't the place to debate the PMs salary, and if a retiring PM wasn't able to sell his / her memoirs for £tens of millions then I would certainly argue that the salary should be much higher).

Building societies need to pay the going rate to ensure they can attract and retain the necessary skills to run a multi location, highly technological operation safely handling billions of their customers' money. Don't forget that at this level these people have numerous choices of who they work for and where they work. The competition for their skills is considerable.

I have no problem with people being paid the going rate for a job. I was simply challenging your assertion that building societies are virtuous and good and banks are automatically bad. That is nonsense.

Your choices of the Kent, Nationwide and Skipton were highly selective.

I picked Nationwide because they are the biggest. I picked Skipton because I know somebody who used to work for them. I picked Kent because I've finally worked out that they sponsor Charlton Athletic. I was not in any way being selective and actually quite resent the suggestion. If you feel like it name 3 building societies of your choice and give me 48 hours. I will then provide you with 2 examples for each of how they have their own little tricks that they play on customers.

So, on balance, do you prefer to entrust your money to a bank or a building society, given your poor opinion of some of the mutuals?

The one that provides me with the best balance of rate, security and service. What other criteria should I use?