Banking threat?

planteria

puk999 wrote: »

Can't banks use the money in the current accounts to lend out to others, make a profit, and cover the cost of operating the accounts?

you would think so, and in many cases they have done so. Building Societires, with a simpler 'Savings & Mortgages' operate in a similar way.

puk999 wrote: »

If we're on the verge of losing free current accounts, how come I'm being paid by the banks (e.g. TSB 5%) to put my money in their free current account?

a good question. i'm bagging 5%, 3% and £5/m bonuses. but perhaps over time these are likely to be pulled? the day we have to pay a monthly fee for all current accounts we'll likely be back to using 1 or 2 each, not the 8 i currently have, or the 20+ that some stoozers have.

anoncol

I'm happily using santander 123 as my current account which i pay for. Yet i make crap loads on cashback, especially with the credit card as well.

Thrugelmir

puk999 wrote: »

The sum the money in all current accounts for a bank will be considerable. Current accounts are free at the moment. They've been free for as long as I remember. Does that not demonstrate how banks make a profit from current accounts?

Um no. Banks subsidise current accounts by cross selling other products and charging higher fees on services.

Do you remember when banks opened for business at 9.30 and shut at 3.30? Much has changed since then. Yet the current account service is still free.

Let's take PPI. So far HSBC, LloydsHBOS, Barclays and RBS have made provision for £20 billion. With more to come. This totally wipes out the profits made during the boom years. In the case of HBOS would make it loss making if the accounts were restated now.

Banks no longer have this highly profitable income. With which to fund better online banking services for free.