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Don't blame the campaigners for the end of free banking Blog Discussion
MSE_Jenny
MSE Staff 1.3K Posts
This is the discussion to link on the back of Martin's "Don't blame the campaigners for the end of free banking" blog. Please read the blog first, as the discussion follows it.
Read Martin's "Don't blame the campaigners for the end of free banking" Blog
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Keep up the good work!
In the current system, if you agree overdrafts or perish the thought remain in credit then banking is free and charges are zero! (OK I know they make money on deposits held but essentially at point of delivery we have free banking.)
The evolving system will have the profits of the bank being derived from a larger base, ie those previously enjoying banking will have to pay. My argument is that unless there is an issue around understanding charges then failing to keep within agreed facilities should attract a charge that reflects the cost of managing the account and serving as a deterrant for those who breach rules and agreements. Those that have financial difficulties obviously should be helped with agreed facilities etc.
The evolving system will mean that serial abusers of overdraft facilities etc will be able to carry on with impunity. How will that help them to mange their money better. This is part of a bigger picture where perhaps part of an unauthorised charge or a levy on bank profits could be used to develop an education programme for people to help society move away from the instant purchase culture that has developed over the last 20-30 years and get them to mange their money better.
I do not go overdrawn, if I can't afford a new TV etc I'll save, I get paid by BACs and pay my bills by DD and debit card - why should I subsidise someone who doesn't pay any attention to their balance and regularly goes overdrawn?
"3. Banks don’t have to pay bounced cheques. The idea ‘people are unfairly taking the banks money’ is nonsense. Banks have two limits when you go beyond your authorised overdraft; the ‘paid’ and ‘unpaid’ limit. This means internally they allow you to keep taking money out up to a further limit. The system is designed this way so that they can levy these profitable fees."
This is very easy to say but remember that most small cheques are issued with a guarantee card number on the bank and the bank has no option but to pay them even when there simply are no funds to meet them. When I worked in a bank we were continually frustrated by customers doing this, despite requests for them not to or to cut up/return their card, this was deliberate abuse of the system and I have no doubt that these people are now some of those crying that "it's not fair".
It really p's me off that we will all end up suffering because of the actions of the irresponsible minority who can't (and in a lot of cases won't) budget. I know someone who TWICE ran up debts of over £30,000 on overdrafts and credit/store cards (on a salary of £15,000 p.a.). On both occasions she entered into an IVA with her creditors and ended up paying back a fraction of the amount she had 'borrowed', although in my view 'theft' would be a more appropriate word.
Anyone who doesn't play by the rules, and that includes people who exceed their overdraft limit, deserves to be charged £20 or £30 a time as this is probably an accurate reflection of the cost involved to the bank. It is not just a case of popping a letter in an envelope to the customer, there is the initial examination of the account to determine why it has exceeded the limit, the decision on what action to take, the dictation of a letter, the typing and signing of a letter and then the postage for sending it, not to mention the banks other costs such as premises, electricity etc.
What a lot of people seem to forget is that banks are not a charity. They are in business to make money and if you don't like it, keep your money under the mattress and pay for everything in cash!
At first i thought about the hype about people campaigning to get their over inflated bank charges paid back and at first i started moaning to myself that it would be harder to get a decent bank account and wondered how long it would take my bank, to start charging me for my account. The more i thought about it the more i started thinking that the banks were greedy.
Up until i came on MSE i was being paid 0.10% interest on the money sitting in my account which was rubbish. Then i read about people being charged a huge amount of money for bounced cheques and unauthorised overdrafts etc. Again, i thought the banks were quite in their rights not to pay a bill or cheque if there was insufficient funds but to send a letter and charge an extortionate amount of money for doing so was not really on. They were being greedy.
My local high street branch is always very popular. Theres never enough staff on, and the staff that are on are always rushed off their feet whilst trying to flog products that i wouldnt touch with a bargepole cause they are not competative. There are millions of people out there that talked into products that arent competative and are over inflated and i asked myself, where does the money go? They dont spend it on staff.
Then theres people like my elderly mother. She holds nearly £20,000 in her HSBC bank account being charged an apalling rate of interest because she has had the same bank account for centuries and doesnt like change. How much money must they be making out of her? Also my husband has 2 loans with his local bank - they are definately not the cheapest people to have a loan from, but it was easy for him to get these loans through his bank. How much have they made from him? Although my mother and husband has the choice of moving their money and loans i am just saying people will always pay over the odds for ease of use.
Then i came to the conclusion that i do think people ought to be charged for breaking the rules so to speak but i do think the banks have been greedy and have raked in more than they should have done. I think the fees and bank charges ought to be set at a more realistic rate.
Unfortunately i do think the banks have been greedy for so long now that i do think the end of free banking is nigh but i dont blame the people who have claimed back their bank charges. I blame the bank.