"Ending free bank accounts 'fair'"

katecheshire

regularsaver1 wrote:

so it was employers fault

Yes - I had to go up there and demand OHs wages myself - got a couple of hundred but had to wait for the rest. Should we try to claim these charges back from them then? Would we have to go to small claims court? As I am claiming back from bank I can't claim twice.

regularsaver1

well it was the employers fault that the money was not in the account for the bills

Mark7799

Mozette wrote:

Banks make money from having use of our money, by charging interest etc. I have no objection to banks making a profit, but they are greedy. If you get charged unfairly, challenge them! My father was, to be polite, cantankerous, and if he ever got bank charges he phoned them up and complained until they backed down. He never ever paid bank charges, it just takes a bit of effort.

I remember those days and I suspect oldwiring probably does as well. 'Free' banking only applied if you kept a minimum balance of £100 in your current account at all times and charges were based upon the number of cheques, standing orders and direct debits used - i.e. those who kept low balances in their accounts and made heavy usage paid the highest charges.

Strangely, no-one was happy being charged in that way. The most common arguments we had to listen to included 'I was only three days below £100' and 'why am I charged for everything I use'. Only those who kept lots of money in their account were totally happy. So in 1984/5 (I think) Midland announced that customers who kept their accounts in credit would have to pay no charges. The other banks quickly followed suit.

techno_geek

Mark7799 wrote:

I remember those days and I suspect oldwiring probably does as well. 'Free' banking only applied if you kept a minimum balance of £100 in your current account at all times and charges were based upon the number of cheques, standing orders and direct debits used - i.e. those who kept low balances in their accounts and made heavy usage paid the highest charges.
Strangely, no-one was happy being charged in that way. The most common arguments we had to listen to included 'I was only three days below £100' and 'why am I charged for everything I use'. Only those who kept lots of money in their account were totally happy. So in 1984/5 (I think) Midland announced that customers who kept their accounts in credit would have to pay no charges. The other banks quickly followed suit.

Lol, that would explain why my dad ended up with them (but not why he's still with HSBC to this day!)

Anyway...
In France, banks charge you a monthly fee for an account package that includes a small overdraft, card protection and fraud insurance, and sometimes other perks. You also have to pay an annual fee for a debit card.

Even so, no interest is paid on your current account (though that might be about to change), and the pitiful savings rates are largely dictated by the government... the most you can get for your savings is about 3.5%, or 4% if you're under 21! It's shameful, but that's the way things are and nobody really knows any different.

Furthermore, it is ILLEGAL to write a cheque that will bounce... do it once, and the Bank of France will prevent you from writing cheques for 6 years which effectively paralyses you financially - France is still big on writing cheques for everything, though debit cards are more and more widespread.

Banks only allow you to use your overdraft for 15 days in a month, and are very very stringent. Credit cards aren't very widely issued, though if you do get one it is often linked to a flexible loan.


Personally, I don't want free banking in the UK to end... i'll avoid the controversies, but fees and charges are there for a reason. Banks make loads of money as it is, but we should be thankful that free banking still exists because our european and transatlantic neighbours aren't so lucky!

Queenie

katecheshire wrote:

OH started a new job - wages should have gone in weekly. After FIVE weeks still no money. (Same for other employees too) Rang the bank to ask for extension to small overdraft - they said no; bounced a whole lot of small payments - £7, £12 etc and then charged £30 for each one. PLUS two of the companies then charged £40.
OH left the job and managed to get another after a couple of weeks but had to wait to get paid. Almost £300 in charges in one month plus loss of wages. That's how a spiral can start. We got all our payments back up to date but we had no holiday at all last year.

In those circumstances, surely you used your holiday savings to make up the deficit in wage/avoid charges?

regularsaver1

do you mean rainy day funds Queenie? in emergency?

ManAtHome

I suspect the rules for "Premium" accounts will filter down - you'll still be able to get free banking, but will be based on how much you deposit or lend from your bank. Also, they may either bring in ludicous interest rates for unauthorised overdrafts, or just start bouncing cheques/DDs (which they used to do in the "good old days").

Banks, like any other business (and most people...) are there to make money - despite all the "shock horror", their profits seem have risen pretty much in line with total personal debt.

YorkshireBoy

ManAtHome wrote:

Also, they may either bring in ludicous interest rates for unauthorised overdrafts...

I'd put money on it! You only have to look at what's happening with credit cards.

Not long ago (last year?), my Egg Card's APR was 14.9%. It then went to 15.9%, then 16.9%. I note today that people are reporting being notified that their rate is going to 17.9% APR - and that's the 'typical' rate.

My wife has just had her Virgin rate lifted from 15.9% to 29.9% (to be fair though, she has enjoyed almost 2 years of 0% BT offers) - a more-or-less 100% increase.

Furthermore, I've recently received notices of variation for my Yorkshire Bank and LTSB cards that state they are now going to give only 7 days notice of changes to the interest rates. They will, however, let you pay on the old rate if you can clear the card within 60 days. Great if you can do it...an absolute killer if you can't.

The above actions are bound to filter through to current accounts because, in my opinion, banks are always going to want to keep their 'prime' customers on free banking.

Overdrafts will, in my opinion, go the same way as credit cards, ie the banks see you're in trouble - constantly living in your overdraft - so may as well make some money while they can. The result will be a doubling of your agreed overdraft interest rate - perhaps to 35.9% EAR - and 7 days notice of it's implementation.

...or just start bouncing cheques/DDs...

Now that the bank has had a revenue source removed, they might want to continue to 'make the customer pay'. This is relatively easy by just simply refusing to pay DD's (at no cost to the customer) - something which was argued for long ago by dchurch24. The result being that the customer then has to fight on several fronts, ie starting multiple small claims court proceedings against utility providers, broadband providers, the TV licencing people, insurance companies, endowment providers, the mortgage provider, etc, etc, etc for the recovery of 'default' charges levied by said companies.

I'm in the fortunate position in that none of the above will affect me in the short term, but I wonder if the aftermath of the reclaiming charges actions (especially for those reclaiming small amounts) was something that was envisaged at the outset?

I know I saw it coming - surely everyone else did?

seven-day-weekend

MPH80 wrote:

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.

My son does this since, he finds it difficult to manage his bank account, has come to terms with this and now draws out money in cash and hey presto, has accrued no more charges.

Simple.

ManAtHome

Same here YB, I have a couple of credit cards I always pay off so rate changes don't affect me and I suspsect I'll be able to find free banking for some time.

It's probably going to hit people who've managed their accounts even though they don't have heaps (which is sad) as well as the perpetually overdrawn, either way, I suspect the banks will continue to increase profits.