MSE News: Current account market faces full competition inquiry

System

The banks don't want the rate tarts - they cost them money as they demand the best rates etc. They are happy with soft underbelly that are content with low rates, uncompetitive charges etc.

Accepting credit cards will be a minimal cost to a business like John Lewis and would actually increase sales of impulse purchases and costlier items. The handling cost can actually be lower than handling cash.

Pincher wrote: »

Switch, switch, switch is the slogan. It's easy to jump on the bandwagon and say that's the solution, instead of coming up with their own half baked idea like freezing prices after they increased them.


What it actually does is to drum up business for comparison/switching sites. This adds an extra layer of cost, which the consumer ends up paying eventually.


John Lewis accepting credit cards was a bad thing, because the price now has to include the processing fee. The 1% cashback diverts attention from the 2~3% the credit card adds to the price.

Archi_Bald

Heng_Leng wrote: »

There is no real link between the base rate and overdraft costs.

Well there is. The cost of providing credit to their customers varies based on the banks' cost of money. The banks' cost of money is - amongst other factors -impacted by the BoE rate. And that is the same for all banks, so one reason why they have no reason to offer massively different overdraft charges.

grumbler

Well, the link, even if exists, is very weak.
Only for the cheapest credit, like mortgages and cheapest CCs, the link is strong. Overdrafts hardly ever were cheap, and now the tendency is to move from interest to the fixed costs that breaks the link altogether.

Archi_Bald

Seems you are confusing the banks' cost of money, and the way they choose to work out and present the charges for credits they provide to their customers.

The banks' cost of money is very firmly linked to the BoE.

Eco_Miser

I'm still with the bank I joined in 1956 and I've never switched. It's the only one in walking distance and it pays me 3%. Like all the banks it receives and transmits money without making a charge. Unlike most banks, it's always been free. Why would I switch from it?

I'm also with a bank that pays me 5%, but that's three quarters of an hour away, and one that pays me 4%, and another that just pays me for operating their account. They're twenty minutes away. Lucky I don't need to visit them, or the others whose accounts I still have.

Maybe I'm confusing the statistics with my habit of not closing old accounts?

Like others, I can't see a lack of competition for in-credit personal accounts, but fear that this inquiry may mandate charging for current accounts - as Santander 123 and Lloyds Club already do.

matelodave

I use a bank that fulfils my needs, if it doesn't then I'll change. Over my banking life I've moved my account three times to get what I want and I'm now happy with the one I've got at present.
The very last thing I want to do is to pay charges for services that I don't want or to subsidise even more people who can't organise their own finances and expect the rest of us to pay more to keep their charges down. I'm already doing that with my energy, paying more than I should to help those who won't sort themselves out.

grumbler

Archi_Bald wrote: »

Seems you are confusing the banks' cost of money, and the way they choose to work out and present the charges for credits they provide to their customers.

The banks' cost of money is very firmly linked to the BoE.

As I said, the link is extremely weak, and the current situation when the base rate is next to zero while the overdrafts are very expensive proves my point.

Base rate is like variable costs in economics. If the fixed costs are very high, the variable costs have very little effect on the final total cost.

EarthBoy

giblet10 wrote: »

Ideally I'm looking for:

- a gold or platinum debit card (black is not the new gold, IMO

A gold or platinum card means nothing. Barclays bog standard ordinary credit card says platinum on it.

giblet10 wrote: »

but in reality just a shiny card would be nice -

Try MBNA's platinum card. It's shiny and says platinum on it, although I personally wouldn't think that an MBNA card is anything to brag about. http://www.mbna.co.uk/credit-cards/mbna-credit-card/

giblet10 wrote: »

that's what I love about AA Executive Platinum - people who see the card know I am in the top tier, so to speak.

But you're not in the top tier, are you? You yourself said that you can't get a premium account:

giblet10 wrote: »

I'm too poor for the likes of HSBC and Barclays premium offerings

PeacefulWaters

5% interest.
4% interest.
3% interest.
£5 a month.
Cashback at selected retailers.
Cashback on direct debits.
Free travel insurance.
7 day switching.
£100 plus switching incentives.
Clubcard points.
Cinema tickets.
Access to high rate regular savings accounts.
Interest free overdrafts.
Fee free interest bearing overdrafts.
Fixed fee overdrafts.
Monthly fee plus interest charging overdrafts.
Fee free overseas transactions.

Lots of players. Lots of propositions. Lots of competition. Easy to switch.

This investigation is a total waste of time and money.

EarthBoy

An article in today's i complains that it's difficult to compare banks' overdraft charges and work out which is the best for your circumstances because all the banks use different systems and rates. Isn't that what competition means, -all the banks having different charging structures, so that you can decide which one is best for you personally?

I think people who complain there's no competition in banking are simply too lazy to compare different banks. Surely they don't want all banks to be forced to use the same system? That would reduce competition, not introduce more of it.