"Ending free bank accounts 'fair'"

Justamum

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.

But most employers insist on a person having a bank account, same with most benefits etc. If monthly bank charges are brought in, even if you did immediately withdraw the money and use only cash, you would still have to pay the £10 a month (which was mentioned in the article I believe). This is a lot of money to people who really struggle to make ends meet - and not through profligacy either.

MPH80

Justamum wrote:

But most employers insist on a person having a bank account, same with most benefits etc. If monthly bank charges are brought in, even if you did immediately withdraw the money and use only cash, you would still have to pay the £10 a month (which was mentioned in the article I believe). This is a lot of money to people who really struggle to make ends meet - and not through profligacy either.

Precisely my point.

We're (apparently) moving from a situation where those who were poor and can't afford £10 a month *could* avoid charges by operating the way I suggest to a situation where they can't avoid the charges at all.

And if it goes the way that First Direct have led the way with - where if you pay in over £x a month the charge is waived - then the only people left paying the charges are those who are poor.

Where as before there were options for people to avoid charges, in this new world, only the richer can avoid them.

Hardly fair in my mind.

Before the overdraft charges are levied at the unable to avoid and the can't organise. Under the new world system the only people left paying charges are the unable to avoid group.

M.

YorkshireBoy

Justamum wrote:

But most employers insist on a person having a bank account, same with most benefits etc.

That's a common misconception. They may insist on paying money into an account. In fact, any old account (that has a 6 digit sort code and 8 digit account number) will suffice.

Most (all?) savings accounts will accept direct credits such as salary. You'd then just draw out your cash as you needed it.

Justamum

MPH80 wrote:

Excuse me? Perhaps you'd like a look at my bank statements from 2000-2004?

I have been there - and I've worked my way out of it. My £28k of debt was not fun - but I got rid of it through hard work and one of the first things I did was to get myself out of the spiral of charges by going without for several months.

M.

And what did you go without? If we wanted a "healthy" bank account we would have to go without eating and paying the bills for a few months. All these sanctimonious people who think it's so easy to keep your account in the black really make me sick. We don't have holidays, don't buy clothes (my husband and I haven't bought ourselves any for years, and my mum buys for my children). We can't even afford to buy a coat for the winter - I've been using my dad's old, much too big, one while my husband makes do with a fleece. Just as well the winter has been so mild. Not everyone who struggles wastes money on "essentials" such as fags, booze, foreign holidays and the lastest must-have electric gadgets.

Rafter

MPH80 wrote:

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.

M.

I'm not advocating some extreme socialist scenario no.

It is absolutely right that those with poor credit history or behaviour should pay more and should also pay the actual costs for breach of contract.

What is totally unfair though is the cross subsidy outlined by the Nationwide guy that one group of customers make 200% of the profit - and the others sit there pretty making a loss.

As for whether banking should be free, I think as long as you are actively using the account it should be in return for receiving a token amount of interest. The bank makes enough from lending the money elsewhere and the charges it makes against retailers and direct debit bills should cover the operating costs of the account.

I think there should be charges for cheques and other inefficient facilities that cost the bank more.

I'm just agreeing with the Nationwide that charges and products should be fairly priced. I don't think it is right that someone who is highly educated should get a much better deal that someone who is not as fortunate and takes out overpriced Payment protection insurance for example because of clever selling tactics by the banks.

Otherwise the banking system is simply a punitive tax system on the less fortunate which cannot be right - can it?

R.

MPH80

Justamum wrote:

And what did you go without?

Me? I had to move back to my parents. I couldn't afford to live independantly anymore. I won't deny I was lucky with the job I have - but it was only by moving back home that I could afford to pay back my debts.

I'm still there by the way - I got out of debt in December 2005 - but I'm staying there to build up savings until I can properly afford to move back out.

My story is here if you're interested.

http://boards.fool.co.uk/Message.asp?mid=9721901

M.

MPH80

Rafter wrote:

It is absolutely right that those with poor credit history or behaviour should pay more and should also pay the actual costs for breach of contract.

That's not what you implied before - allow me to quote you:

Rafter wrote:

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?

Rafter wrote:

What is totally unfair though is the cross subsidy outlined by the Nationwide guy that one group of customers make 200% of the profit - and the others sit there pretty making a loss.

Why?? If you shop in Tesco the people buying the non-discounted stuff are subsidising those who just buy the 3-for-2 discounts or the RFQS.

I guarantee you that if you went into a supermarket and just bought RFQS they wouldn't make a profit on you.

Rafter wrote:

The bank makes enough from lending the money elsewhere and the charges it makes against retailers and direct debit bills should cover the operating costs of the account.

Really? Quick calculation shall we. Let's say you have a rolling balance in your current account of £200. Lets say the bank can lend that out at 8% (average between mortgage and loans). Bank pays you back 0.1% - so let's call it 7.9%.

I make that roughly £16 they'll make off you over the year. Or to put it another way - roughly 3 hours of work from someone on minimum wage. Doesn't sound like enough to me.

The charges against retailers and direct debits come under the business banking section of their profits and can't be counted here.

Rafter wrote:

Otherwise the banking system is simply a punitive tax system on the less fortunate which cannot be right - can it?

My entire point Rafter is that the less fortunate have options to avoid these charges. They choose not to take them. The only people getting hit by these 'unlawful' charges are the ones who choose not to work around them.

If I can't afford the speeding ticket - I don't speed.

M.

RayWolfe

MPH80 wrote:

Really? Quick calculation shall we. Let's say you have a rolling balance in your current account of £200. Lets say the bank can lend that out at 8% (average between mortgage and loans). Bank pays you back 0.1% - so let's call it 7.9%.

I make that roughly £16 they'll make off you over the year. Or to put it another way - roughly 3 hours of work from someone on minimum wage. Doesn't sound like enough to me.

At last, someone making sense here.
Banks do not make big (if any) profits from personal accounts, they use them as a means of getting different, money making, business.

Kilty_2

I can't see EVERY bank putting an end to "free" current accounts, the ones that don't would increase their customer base very fast.

regularsaver1

Justamum wrote:

But most employers insist on a person having a bank account, same with most benefits etc. If monthly bank charges are brought in, even if you did immediately withdraw the money and use only cash, you would still have to pay the £10 a month (which was mentioned in the article I believe). This is a lot of money to people who really struggle to make ends meet - and not through profligacy either.

I don't think there would be a charge for a basic account with limited facilities