MSE News: What counts as a month? Check with your bank or you could be hit with fines

Former_MSE_Helen

Current account customers should check whether deposits have to be paid on a per calendar or per statement month basis

Read the full story:

What counts as a month? Check with your bank or you could be hit with penalties




Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.

JimmyTheWig

it will update its terms and conditions "in the coming weeks" to ensure it's clear that it counts a month as the statement period, which starts from the date of the account opening and runs for 31 days.

31 days? Every month? That means that, over time, the date will change!

Fruit_and_Nut_Case

MSE_Helen wrote: »

...you could be hit with fines

Can a bank now issue a fine? A charge, perhaps. But not a fine.

Pincher

Why do they bother to impose the charge? Most of the current account holders must be after the 3% interest on £3,000, so they have a pile of cash that's going nowhere.


Maybe they have more cash than what they can do with,
and they are losing money at 3%, so it's a subtle hint for us to close the account and go away.

colsten

Pincher wrote: »

Why do they bother to impose the charge? Most of the current account holders must be after the 3% interest on £3,000, so they have a pile of cash that's going nowhere.

If by "they" you mean Tesco, it is probably because they don't want customers who don't at least deposit £750 every month.

Pincher

colsten wrote: »

If by "they" you mean Tesco, it is probably because they don't want customers who don't at least deposit £750 every month.

TESCO obviously wouldn't want a customer who leaves £1 in the account, and never uses it. What I'm wondering, musing, thinking about is whether they want the £3,000, or is the 3% interest a loss leader, so they can make money in some other way?


If they are thinking like a Pay Day Loan lender, maybe what they actually want is somebody who is constantly overdrawn, so incurs overdraught and loan rates, and yet has a regular income (£750 a month) to cover the lucrative interest. In this case, they would much rather I go away with my £3,000, on which they are losing money.


Well, I intend to, back to Nationwide FlexDirect, and 5% on £2,500, after a decent interval. Should get a Introduce a Friend welcome bonus as well.

JimmyTheWig

Pincher wrote: »

TESCO obviously wouldn't want a customer who leaves £1 in the account, and never uses it. What I'm wondering, musing, thinking about is whether they want the £3,000, or is the 3% interest a loss leader, so they can make money in some other way?


If they are thinking like a Pay Day Loan lender, maybe what they actually want is somebody who is constantly overdrawn, so incurs overdraught and loan rates, and yet has a regular income (£750 a month) to cover the lucrative interest. In this case, they would much rather I go away with my £3,000, on which they are losing money.

What they probably want is to be your main bank in a general sense. The 3% must be a mild loss-leader at least as it is more than you can get in a standard savings account. If they were making money on it they wouldn't limit it to £3k.
But if they can become your main bank then you'll look to them for a credit card, personal loan, etc and make plenty from you.
Just sticking £3k in an account and forgetting about it isn't making them your main bank.
Moving £750 from one account to another and back again isn't, either, but they can't guard against that very easily!
They want you to pay your salary into the account - thus making them your main bank.

jimjames

Fruit_and_Nut_Case wrote: »

Can a bank now issue a fine? A charge, perhaps. But not a fine.

I was expecting a response from MSE to outline what these fines are and which banks it affects.

I certainly wouldn't take out an account where you can be fined for not meeting criteria but I suspect it is a mistake in the title.

colsten

JimmyTheWig wrote: »

If they were making money on it they wouldn't limit it to £3k.

They are actually limiting it to £6K since you are allowed 2 of these accounts. I agree though, they won't make much money of these accounts.

Pincher

If a company can't make better than 3% return on capital, they should just give the money back to the shareholders, and close up shop. I know TESCO is in trouble currently, putting executives on the chopping block, but a standard grocer retailer should be able to get better than 3% return. TESCO Bank would obviously invest the money in things that have better prospects currently. ALDI and LIDL, maybe, hehehe.

colsten

Banks don't tend to invest current account deposits in the stock market. It wouldn't be a very clever thing to do to start with, and there is such a thing as the Vickers Report, too.