What's trickling down on my back

michaels

Where has it been demonstrated that overdraft charges are illegal? I thought the courts ruled against the OFT when they tried to claim they were.

TruckerT

There is only one thing which banks are still useful for (in most cases)

Handling income and outgoings is it

It's called retail banking, and it could be handled in your local charity shop, it's that simple

But there is no reason why it should be free-of-charger

TruckerT

Loughton_Monkey

Just complicate things, I note Santander's new 1-2-3 Current Account. As I understand it, all you do is take out the account, pay £2 a month fee, and pay your Rates/Utilities/Broadband etc. Direct Debits from the account and you get between 1%/3% cashback on those bills, plus 3% interest on the cash. Their calculator fed with my own figures tells me I would receive £248 a year cashback! [Note I do have very high utility bills, so my case is not normal]

Very tempting!

chewmylegoff

michaels wrote: »

Do you have any stats to back up the 'poor'? I would guess poor people are more likely to have no overdraft basic bank accounts and it is lazy people/people who are unable to defer gratification who use expensive overdrafts for short term borrowing.

Banks also obviously make money on receiving funds for free and lending them at rates of minimum 6% for personal loans and often 30% for credit cards.

There are only a few big players in the current account market in an industry where economies of scale obviously present massive barriers to entry. I am sure they would be able to manipulate prices to make excessive profits if they charged everyone.

Remind me again who you work for Mr G?!

Banks cannot lend against current account balances, they have to hold cash 1:1 to cover the bank's liabilities to current account holders.

This if you hold a current account and keep all your money in there and never go into overdraft the bank makes a loss on your business, which is why they try to sell you all sorts of insurance or to encourage you to move your money into an ISA or savings account so they can lend against it.

A._Badger

Loughton_Monkey wrote: »

Just complicate things, I note Santander's new 1-2-3 Current Account. As I understand it, all you do is take out the account, pay £2 a month fee, and pay your Rates/Utilities/Broadband etc. Direct Debits from the account and you get between 1%/3% cashback on those bills, plus 3% interest on the cash. Their calculator fed with my own figures tells me I would receive £248 a year cashback! [Note I do have very high utility bills, so my case is not normal]

Very tempting!

Unless you pause to consider Santander's reputation, as witnessed many times on this site!

zenmaster

Generali wrote: »

For a start the BCSB (an industry body) reckon the majority of the costs of illegal unauthorized overdraft fees fall on the poor:

Do you mean that the unauthorised overdraft or the fees are illegal?
The former is definitely illegal in some European countries (arguably "obtaining goods by deception" in the UK) and the latter was judged not so a couple of years back.

Generali wrote: »

"Disturbingly, the charges fall hardest on people on low incomes, such as students, who can least afford them," Seymour Fortescue, chief executive of the BSCB told BBC News.

Funny though, they can afford £100 bar tabs and iPhones/Blackberries.

Rotor

Penalty fees on credit cards (or rather the level of them) were outlawed : They are restricted to £12 now whereas a few years ago i was charged £20 or more if I missed a payment.

michaels

That really surprises me. My 'savings accounts' I can faster payment out up to 100k at a time, I can't see how lending against them is any less risky than lending against my current account balance.

chewmylegoff wrote: »

Banks cannot lend against current account balances, they have to hold cash 1:1 to cover the bank's liabilities to current account holders.

This if you hold a current account and keep all your money in there and never go into overdraft the bank makes a loss on your business, which is why they try to sell you all sorts of insurance or to encourage you to move your money into an ISA or savings account so they can lend against it.

Generali

michaels wrote: »

That really surprises me. My 'savings accounts' I can faster payment out up to 100k at a time, I can't see how lending against them is any less risky than lending against my current account balance.

It's because people don't usually move large sums out of their savings accounts whereas most people spend their current account down to about £0 by the end of the week/month.

Generali

zenmaster wrote: »

Funny though, they can afford £100 bar tabs and iPhones/Blackberries.

My most recent experience with students as a uni tutor a couple of years back is that £100 bar tabs are a thing of the past and the mobile phone bills are paid by their parents.

Most students are remarkably boring these days.