Time to end free banking? Poll help needed

dtaylor84

MSE_Martin wrote: »

Hi folks,
- Monthly fee:You pay a fee each month then no other charges (inc overdraft)

- Transparent fees: ie you pay small amount for everything you do eg cashwithdrawal

- No change: Keepthings as they are

Personally I'm quite happy with the current system where HBOS pay me a fee each month.

However, I can see the arguments for introducing a small monthly fee.

OTOH, I don't think that a small monthly fee should necessarily mean that all overdrafts are free. You just end up with the opposite of the current situation (people in debt subsidising those in credit) where people who can manage their finances subsidise those in debt!

So perhaps an option for a small basic monthly fee, but still interest for those in credit and charges for those using an overdraft (but less punitive than the current fees).

But in the end, it's just a commercial decision for the banks -- there's nothing stopping banks charging fees for accounts, and some banks do already. (Ignoring basic accounts for now.)

innovate

dtaylor84 wrote: »

However, I can see the arguments for introducing a small monthly fee.

What are the arguments?

And how small is small?

antrobus

Stompa wrote: »

But there was free banking prior to 1986 surely? I must have opened my first current account (with Barclays) in 1974, and unless I'm misremembering (it is a long time ago!) I don't think I've ever been charged since then.

Yes and no.

When people talk about 'free banking' it has to be presumed they're talking about the UK model of 'free-if-in-credit' banking. Barclays was, I believe, the last to adopt 'free-if-in-credit' banking in 1989. Before that it was 'free-if-you-have-a-minum-balance-of-£500' - which was the standard model pre BSA 1986, and before that in the 1970s you were charged transaction fees but offset by some notional credit based on your average balance.

When I got my first job in 1980 I switched from Barclays to Williams & Glyns in order to avoid paying bank charges - 'free-if-in-credit' banking being a privilige only extended by Barclays to students, and I simply didn't have the £500 needed to qualify.

antrobus

pvt wrote: »

I'm in favour of the status quo. Which is leaving it to market forces.

As far as I am aware, banks are pretty much at liberty to structure the product they provide as they please. And it seems to work just fine to me. I can't imagine anything worse than the government interferring with that and telling banks they have to charge those who bank in credit more, and those who bank in debt less.

It's normally the case, where there is healthy competition, that providers who offer a poor deal will lose customers to providers who offer a better one.

Absolutely. Which is why the whole premise of the poll is, well, stupid.

innovate wrote: »

What are the arguments?

In a free country people are allowed to offer things for sale at whatever prices take their fancy.

innovate wrote: »

And how small is small?

Dunno, how about £2 a month if you fancy a Santander 123 account, or about £1.50 a week if you fancy a current account with a credit union?

innovate

antrobus wrote: »

In a free country people are allowed to offer things for sale at whatever prices take their fancy.



Dunno, how about £2 a month if you fancy a Santander 123 account, or about £1.50 a week if you fancy a current account with a credit union?

I was hoping for an answer from dtaylor84, since they have suggested there are "arguments for introducing a small monthly fee"

Stompa

antrobus wrote: »

When people talk about 'free banking' it has to be presumed they're talking about the UK model of 'free-if-in-credit' banking. Barclays was, I believe, the last to adopt 'free-if-in-credit' banking in 1989. Before that it was 'free-if-you-have-a-minum-balance-of-£500' - which was the standard model pre BSA 1986, and before that in the 1970s you were charged transaction fees but offset by some notional credit based on your average balance.

When I got my first job in 1980 I switched from Barclays to Williams & Glyns in order to avoid paying bank charges - 'free-if-in-credit' banking being a privilige only extended by Barclays to students, and I simply didn't have the £500 needed to qualify.

Hmmm, I was a student until 1977, but I'm pretty sure that after that I still didn't incur any charges (and there's no way I'd have had £500 in my account).

pimento

As I pay no fees I'd be mad to change, so no change for me.

StephenM_2

antrobus wrote: »

Yes and no.

When people talk about 'free banking' it has to be presumed they're talking about the UK model of 'free-if-in-credit' banking. Barclays was, I believe, the last to adopt 'free-if-in-credit' banking in 1989. Before that it was 'free-if-you-have-a-minum-balance-of-£500' - which was the standard model pre BSA 1986, and before that in the 1970s you were charged transaction fees but offset by some notional credit based on your average balance.

When I got my first job in 1980 I switched from Barclays to Williams & Glyns in order to avoid paying bank charges - 'free-if-in-credit' banking being a privilige only extended by Barclays to students, and I simply didn't have the £500 needed to qualify.

I'm pretty sure it was only £50. I started work in 1981, had a Barclays account, and never paid bank charges. I would never have been able to keep to a minimum balance of £500 back then.

dzug1

pvt wrote: »

I'm in favour of the status quo. Which is leaving it to market forces.

But it isn't market forces - it's highly regulated market forces. Whether over regulated or underregulated or just right is a matter for debate but please don't think it's a free market

dzug1

innovate wrote: »

The option I like to see added to the poll is: I fail to see the logic in the argument for charges.

I would really like to have a detailed explanation (from those who argue for the charges) as to why banks need to mis-sell if they cannot charge for bank accounts. And what gives them the right to mis-sell unless they are allowed to charge.

The logic for charging is based on the premise that those who use a service should pay for the costs of it plus a 'reasonable' profit for the supplier. And the more precisely the user pays those costs, the 'fairer' it is. The present system is (in the view of some) too broad brush leading to some customers cross subsidising others.