End of fee-free banking?

bholland

" Charging a current account fee may be a "fairer proposition" than offering free banking, according to a leading financial industry figure. "

" Banking analysts have warned that free banking may be under threat.

This is because penalty charges, levied on people who exceed their overdraft or credit card limits, are under attack. "

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

So now they want to charge us fees for the privilage of investing OUR money, which they already make a HUGE profits from (however a large percentage of this is probably in the business sector)

" The UK's top banks are forecast to rack up combined profits of £38bn for the past year despite continuing fears about their exposure to bad debts. "

http://newsvote.bbc.co.uk/1/hi/business/6373281.stm

Its not that I dont agree with companies making money, its the collusion on charges etc that would annoy me (if it were to happen).

Any thoughts?

RayWolfe

If you think banks make serious money from current accounts, then you're on a different planet.
Most of the rest of the world charge and we will all end up paying for those who can't/won't control their spending.

bholland

Like I said, most of the profits are from the business / invest banking sector. The money they make from personal accounts may be small in comparison, but I would imagine still the envy of many companies.

We work for the businesses that the banks make most of their profit on.

However I can see the point that the cost should be shared

ahh, nothing better than a rant hehe

oldfella

Most of the rest of the world charge and we will all end up paying for those who can't/won't control their spending.

---

are you sure this is logical - if they did manage their accounts better the banks wouldnt be able to charge fees = end of free banking ?

PBA

I can't see fee-free banking going away. There's far too much competition (at least 9 current account providers with nationwide branch networks, plus regional and online offerings) for everyone to stop offering free banking.

HSBC said last year that they make less than £1 a week for each of their current account customers. By extension, any bank offering more than 0.1% interest is making less than that! Banks aren't trying to make money from current accounts, but having loyal current account customers provides a fantastic database of people they can sell loans, insurance, investments, etc to. Of course, banks will be happy to sell you optional premium accounts for a monthly fee, but I can't see any bank being willing to lose many potential customers for the sake of a compulsory monthly fee.

newfoundglory

Banking in this country never has been "free" anyway. Free banking doesnt exist, and never has. Its all an illusion to make you think it does. Changes to the way we all pay for banking will just become more transparent - you will know how much you pay for service x and service y.

I suspect we won't convert entirely to fee-charging banking though. It will be similar to that of First Direct... you will need to pay a monthly fee (probably in the region of £5 - £15/month), or hold more accounts and products or minimum balances with the bank in order to have the fee waivered.

Some banks will introduce balance charging.... "you will be charged a monthly fee of £5/£10 unless a minimum balance of £1000/£2000 is maintained". There may be an annual charge for holding a credit or debit card, say £20, you may be charged a fee for more than a set number of ATM withdrawls a month (say more than about 6 - 8), and fees for arranging overdrafts will be put in place.

I can see us going down this path within the next 2 years.

thumshie

newfoundglory wrote:

Some banks will introduce balance charging.... "you will be charged a monthly fee of £5/£10 unless a minimum balance of £1000/£2000 is maintained".h.

This is pretty much what is happening in America(Bank of America),Australia(HSBC) to name a couple I know of. The other approach(chase bank in USA) is where you need to have a 'salary credit' of x amount every month to avoid the fee.

MPH80

thumshie wrote:

This is pretty much what is happening in America(Bank of America),Australia(HSBC) to name a couple I know of. The other approach(chase bank in USA) is where you need to have a 'salary credit' of x amount every month to avoid the fee.

So the result is that the people who can't avoid the bank charges when they go into their overdraft ... because they are poor (although there's a good argument they could still have avoided the charges - see my previous posts) ... are still the ones who get charged.

But the 'won't manage my account' brigade - who get charged simply because they don't pay attention under the current system - now avoid the charges.

M.

oldwiring

bholland wrote:

" Charging a current account fee may be a "fairer proposition" than offering free banking, according to a leading financial industry figure. "

" Banking analysts have warned that free banking may be under threat.

This is because penalty charges, levied on people who exceed their overdraft or credit card limits, are under attack. "

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

So now they want to charge us fees for the privilage of investing OUR money, which they already make a HUGE profits from (however a large percentage of this is probably in the business sector)

" The UK's top banks are forecast to rack up combined profits of £38bn for the past year despite continuing fears about their exposure to bad debts. "

http://newsvote.bbc.co.uk/1/hi/business/6373281.stm

Its not that I dont agree with companies making money, its the collusion on charges etc that would annoy me (if it were to happen).

Any thoughts?

Same Same repy as I posted elsewhere in MSE.