MSE News: Call to end free bank accounts

Gromitt

NFH wrote: »

What to you mean by the "end of free banking"? Do you mean monthly fees for current accounts or do you mean the introduction of charges for avoidable services like writing and depositing cheques?

A monthly fee which includes x amount of cheques, x amount of ATM withdrawals, etc.

Personally, I'd prefer the bank to close all its branches, have one central location where I'll post any cheques I receive, and do everything online or by telephone. If you also made a deposit of at least £800/month, the service is free for, say, 2 cheques per month, 4 free ATM withdrawals from a competitor bank, and unlimited withdrawals for your own bank as well as free customer services (telephone banking). If you paid in less than £800/month, a cheque would cost £1, ATM withdrawals 25p unless it was your own bank, and customer services would cost 10p/minute. Overdrafts would cost £35 for the first 1p and 29% APR. Bounced DDs and late payments would be £25 per infringement, upto £250/month. Letters from the bank would cost £15 per letter.

NFH

Gromitt wrote: »

A monthly fee which includes x amount of cheques, x amount of ATM withdrawals, etc.

What about a pay-as-you-go model whereby you pay only for each incidental service that you use? Compare this to mobile phones where a monthly charge used to be the only model until PAYG was introduced in the late 1990s.

Gromitt

I think the idea was to reduce the amount of "surprise!" charges and have one fixed charge per month, but I don't see why the people who don't get charges should pay for those who do.

Or do you mean the like of walking into a bank and buying a cheque book for £25 which comes with 25 pages? How would you pre-pay for ATM transactions/etc ?

NFH

Gromitt wrote: »

Or do you mean the like of walking into a bank and buying a cheque book for £25 which comes with 25 pages? How would you pre-pay for ATM transactions/etc ?

I'm not referring to pre-paying in advance characteristic (as the bank already has your money) but to paying each time you use a service. Whereas mobile phone monthly contracts include a bundle of calls, texts and data, on the other hand pay-as-you-go incurs charges each time you communicate. I'm suggesting the same with bank accounts. If monthly charges are introduced, there should likewise be a pay-as-you-go option whereby you pay individually for each cost-bearing transaction, e.g. cheque, cash withdrawal etc.

JuicyJesus

NFH wrote: »

What about a pay-as-you-go model whereby you pay only for each incidental service that you use? Compare this to mobile phones where a monthly charge used to be the only model until PAYG was introduced in the late 1990s.

I'm really not sure how prepayment for banking services could work. You could end up in the scenario that you need money but your "credit" has run out. If you could then just "top-up" the credit from your balance that would then defeat the purpose of such an arrangements, vis a vis limiting fees.

Business bank accounts currently work on the basis that a months' charges for transactions are rolled up and invoiced to you, then deducted from your account a few weeks later. That seems like the only sensible way of charging for banking services to me.

NFH

JuicyJesus wrote: »

Business bank accounts currently work on the basis that a months' charges for transactions are rolled up and invoiced to you, then deducted from your account a few weeks later. That seems like the only sensible way of charging for banking services to me.

Yes, that's exactly what I mean. Or debit each charge individually. Just don't force the customer to buy a bundle of services when they may only need to do the odd transaction now and again.

nilrem_2

pqrdef wrote: »

But then people who can't use computers will still complain that they're at a relative disadvantage and are being discriminated against.
Oh, and what about younger people who can't use computers?

Most young people will have grown up with computers and are well used to them or they jolly well ought to be, people like my mother who is 92yrs old are from a different era altogether they struggle to use things like DVD's and mobile phones let alone computers.

About 10 years ago a bank manager told me that banks do not want people with a few pounds saved who write cheques and use branches and unless you can do on-line banking you are going to be stuck at having a bank account. As the years go by that comment is gradually coming true.

Personally I like on-line banking and would be lost without it but I do feel sorry for old folks like my mother who are left behind. I try to explain to her that banks are running a business to make money; no different really to her milkman or Tesco's but like a lot of people she thinks it's her right to have an account almost as if banks are a charity!

JuicyJesus

nilrem wrote: »

she thinks it's her right to have an account almost as if banks are a charity!

Lots of people have that attitude. And, as previously mentioned, the attitude that they are entitled to have all sorts of different and expensive services at their convenience without actually paying for any of it in any meaningful way. Then when they do have to pay something, they kick and scream about evil bank charges even though 99% of the time these charges are entirely the customer's fault.

With regards to the article by the way, I'm not sure if it's a surprise. The FSA are on record as wanting explicit charging (i.e. prices per service) rather than implicit charging (e.g. prices for some services are rolled into the overall price of the package, or into prices for other services). And with banks having revenue streams rapidly cut off, along with money being siphoned out of retail banking institutions through PPI claims and such, they are being backed into a corner.

MoneySaverLog

Trouble is the banks listen to these stuffed shirts.

The first however to do so, will hopefully result in their demise.

grizzly1911

JuicyJesus wrote: »

entitled to have all sorts of different and expensive services at their convenience without actually paying for any of it in any meaningful way.

If you want anything more than a debit card and access to cash and DDRs then I don't consider these exotic needs. They are electronic and cost a pittance in operating cost individually.

If you want overdrafts and borrowing facilities, or specialised services then those should be paid for , those are the ones with the high servicing costs.

Then when they do have to pay something, they kick and scream about evil bank charges even though 99% of the time these charges are entirely the customer's fault.
And with banks having revenue streams rapidly cut off, along with money being siphoned out of retail banking institutions through PPI claims and such, they are being backed into a corner.

Money maybe siphoned out through PPI but they banked the profit first. The real cost to them is for their own ineptitude in driving sales of PP product that wasn't fit for purpose.

The BAnks could retrench and accept modest profits for modest services, and I guess that is what will happen a bit like a budget airline model, or an ALDI model, quality but limited choice.

Or perhaps A new form of cooperative/credit union for members.