"Ending free bank accounts 'fair'"

MPH80

http://news.bbc.co.uk/1/hi/business/6375063.stm

Mr Beale said that charging a monthly fee would more truly reflect the costs of running a current account.

"In a way, I do believe fee-based banking is a fairer proposition," Mr Beale said.

"It's not free to run an ATM or a branch, so what it means is that when you apply charges to delinquent accounts they bear the large proportion of that cost.

"In an ideal world, the costs would be shared," Mr Beale added.

However, when Mr Beale takes the helm at the Nationwide on 1 April customers will not instantly be hit with current account fees.

Mr Beale said only if the industry changes its approach to fees would the Nationwide follow.

PaulW922

Yes and if you look further he also admits that customers whose accounts become delinquent also bear a higher proportion of the overall cost of running them - a very nice admission for anyone trying claim back fees from Nationwide.

Rafter

Totally fair in my view.

Why should one group of customers who chose to operate their account manually via a branch be subsidised by those who use the internet?

Why should someone who occassionally go into the red subsidise other customers who manage their finances well.

Would you be happy paying £5 for a pint of milk so that someone else can have it for free?

R.

MPH80

Rafter - the point in your examples is that people have choice.

You don't have to manage your account in a branch. You don't have to go into the red.

There are many many people who go into the supermarket each day and choose to pay over the odds for their milk and thus help to subsidise those who choose to buy the value line.

Subsidisation only becomes unfair when the person lacks the choice.

M.

PosterBoy77

Judging by the record profits forecast for the UK banks, it does not seem like it costs them very much to run accounts, otherwise their profits would be far lower. It is just another way to justify taking even more money for looking after money.

h4zel

I think I agree with the above post... I may be being a bit daft here but what about all the money the banks generate when using our money?? ...I'm sure the profit they are making isn't reflected in the interest we're paid... I for one would be happy to receive no interest on my current account in return for a free banking service... but personally I would rather just stuff all my money in a suitcase and cut the banks out completely!!:p

sgx.saint

You don't have to go into the red.

Sometimes it is beyond an individuals control.

Rafter

MPH80,

Take your point that you have a choice. Doesn't mean you should be landed with unlawful charges though.

Why should say 20% of bank customers pay £100 a year in unlawful charges so the other 80% pay nothing? Wouldn't it be fairer if everyone paid £20 a year each?

Should 50% of loan takers pay 12% APR on their loans including PPI while the other 50% pay 6% or should everyone pay 8% or 9% including insurance?

Should one group of customers get 0.1% on their current account balances while others (who switch regularly and who can pay in £1000+ a month) earn 6% - or should everyone get 4% but pay a monthly charge for operating the account?

There will always be subsidisation as long as their are marketing deals and thankfully websites like this help to dampen the effect. Choice is great for consumers who are savvy and educated, but their needs to be some level of fairness for all too.

Al Mac,

I agree a delinquent account does require more effort, but that is the whole reason that banks charge more interest on higher risk loans, to cover the cost and potential losses if a loan goes bad?

Maybe if banks weren't subsidising their lending through unlawful charges and overpriced insurance, they would be more careful about ensuring loans are affordable for their customers in the first place?

R.

Tootsie_Roll

mikael wrote:

Judging by the record profits forecast for the UK banks, it does not seem like it costs them very much to run accounts, otherwise their profits would be far lower. It is just another way to justify taking even more money for looking after money.

Personal current accounts make the bank no money at all - all their profits come from other products, business banking and so on. The bank accounts are a loss leader just to attract customers in the first place.

MPH80

sgx.saint wrote:

Sometimes it is beyond an individuals control.

In perhaps 0.0001% of the cases yes - it might be unavoidable.

But if you don't have sufficient income to avoid risking charges - then there's a very simple solution - you go back to the way our parents and granparents operated - cash.

Your wages arrive in the account, you immediately withdraw it all, take it home and put it somewhere safe. You pay each of the bills with those crisp notes from the bank and, surprise surprise, you can't get hit with charges.

No cash = no spending. People coped very nicely without unauthorised overdrafts before this generation.

If you are taken overdrawn by something not your fault, then the person who did do it should cover the charges (e.g. as would be covered under the Direct Debit guarantee).

Using these two simple methods means the only people who would be hit by charges are those who won't control their accounts.

M.

MPH80

Rafter wrote:

Why should say 20% of bank customers pay £100 a year in unlawful charges so the other 80% pay nothing? Wouldn't it be fairer if everyone paid £20 a year each?

Should 50% of loan takers pay 12% APR on their loans including PPI while the other 50% pay 6% or should everyone pay 8% or 9% including insurance?

Should one group of customers get 0.1% on their current account balances while others (who switch regularly and who can pay in £1000+ a month) earn 6% - or should everyone get 4% but pay a monthly charge for operating the account?

Should I work hard at school, go to university, and then work hard at a job in order to be paid more - or should everyone earn the same amount regardless of skill, effort or role?

I doubt you'd agree with that statement.

So - why would you refuse me the benefits of working hard to maintain a credit record so I can be charged less for a loan or credit card than someone else who didn't?

Ok - it's less effort to maintain a credit record than get a degree - but the point is the same - you work to a goal. For a job - you work to enjoyment or you work to higher pay. For a credit record - you work to pay less on credit.

If you choose not to work hard at school - you are lowering your chances of that job you want ... if you choose not to control your finances/spending - you lower the chances of cheaper credit.

M.