2015 - No fee bank accounts. Where are they?

Kathiecarlos

'By the end of 2015, everyone will be able to have a basic bank account. And unlike now (and this includes the accounts below) these new basic accounts will be completely fee-free - there will be no charge for failed payments (Virgin Money already has this - see below). Quote from Moneysavingexpert - Aug 2015
We're trying to find one of these accounts for our mentally disabled son who has difficulty managing his money. Nationwide closed his last bank account when we eventually paid off his overdraft [mainly consisting of bank fees for failed payments]. He has a county court judgement against him and is in receipt of a disability allowance. We need to find a no-fee basic bank account for him. Help please?

xylophone

https://www.mencap.org.uk/bank-accounts

Is it worth a call to Mencap?

Is it possible for you to be PA for your son? You could open a bank account on his behalf to which he would have no access, (it would receive his benefits/pay out DDs for utilities etc) then set up a SO to a savings account with a card so that he could access his pocket money?

http://www.ybs.co.uk/savings/online/index.html see internet saver.

Archi_Bald

A whole host of banks are now offering the new basic account - Santander, Natwest/RBS, Barclays, and Nationwide are the ones I remember seeing mentioned in a very recent thread on here. Not all of them (may be none?) advertise these accounts in any big way as these are not profitable accounts to them.

Worth finding the thread in which this was discussed over th last month or so.

grumbler

Archi_Bald wrote: »

A whole host of banks are now offering the new basic account - Santander, Natwest/RBS, Barclays, and Nationwide....

Offering is a very ambiguous word.
E.g. Natwest are offering it, but not to everyone as MSE and the OP said: MSE News: Charge-free basic bank accounts unveiled

Anthorn

Here's the theory:
https://www.gov.uk/government/news/new-basic-fee-free-bank-accounts-to-help-millions-manage-their-money

The theory is most definitely an admission that existing basic bank accounts are not in fact basic in the sense that they are not what they were originally intended to be: A free bank account for all.

Personally, I don't see any difference at all between the old basic bank accounts and the new: Still not a free bank account for all!

colsten

Anthorn wrote: »

Still not a free bank account for all!

That's not awfully surprising when you think about it. How would you

1. define
2. fund

a free bank (current) account for all?

Do you know how much it costs a bank to provide a current account to you?

I don't know how much it costs them for myself, but I do know that there is a not insignificant cost to providing me with (in no particular order)

• a really reliable means of receiving my income every month
• 24x7 online access,
• 24 x7 ATM withdrawals anywhere in the world,
• a plastic card with pretty good protection against thieves,
• the odd letter advising any T&C or interest rate changes,
• an unreserved protection of my funds up to £75,000,
• brick and mortar Branches I can wander into and which are staffed with humans (who presumably expect to be paid for being there and competently deal with my requests? or do/should these people work for free?),
• the services of their paid staff who make sure my account can't be hacked in due to their negligence,
• services that ensure my utility bills get paid on time without me having to do ancient things like writing and posting a cheque at the right time (remember when we had to do this!?!),
• services that allow me to send money one-off or regularly to someone else without needing to fear that the money gets stolen on the way,
• facilities that enable me to spend my money 24x7 in shops if I so desire,
• etc etc etc etc etc

Most UK banks have over the years funded those services by paying zilch interest on current accounts, and charging for the use of certain of their services.

The costs for providing the various services won't go away, not unless everybody working in a bank agrees to work for free, and if the banks get their buildings, utilities, computing facilities, etc etc etc also for free.

Where do you want to stop? If our local bank cashiers should work for free, surely they should be getting free food, clothes and shoes in the supermarkets, free bus tickets and free cars to get to work, and free houses, pensions and funerals. Who will pay for the upkeep of their Branches? Who will pay for their IT facilities?

So bottom line is we need to be a bit real.

Everybody should have a current account, I agree with that. Everybody should only be able to spend the money they can afford to spend - I hope everybody agrees with that, too, as I for one will not agree to pay for someone else's mobile or electricity or internet connection etc.
Everybody should be realistic - "free for all" doesn't exist. Not even the air we breath is free - we need to pay to keep it breathable.

Lansdowne

That really is a rubbish post, because nobody is proposing that all banking services should be provided cost free. It's always been the case that some bank services are paid for by the customer, some provided free, and some of those listed in that post (cash handling, debit cards etc) are paid for by the retailers. It's not too much to ask that a basic account should be provided free to those who only require the limited services involved. And if that meant more banks initiating a monthly charge 123-style on the "extra" current accounts that pay interest, I would imagine the gains would help balance the losses.

colsten

Lansdowne wrote: »

That really is a rubbish post, because nobody is proposing that all banking services should be provided cost free.

Please point me at the post that explains how banking services can be provided free of charge.

Lansdowne wrote: »

It's always been the case that some bank services are paid for by the customer, some provided free, and some of those listed in that post (cash handling, debit cards etc) are paid for by the retailers. It's not too much to ask that a basic account should be provided free to those who only require the limited services involved. And if that meant more banks initiating a monthly charge 123-style on the "extra" current accounts that pay interest, I would imagine the gains would help balance the losses.

Think you lost me there. Who pays? The retailers? The banks? The customer? I think you know the answer.

grumbler

Retailers pay for card transactions.
Customers pay for some services.

Why do you want an explanation? Are you saying that MSE article was a misinformation?

MSE wrote:

A basic bank account with no fees for failed payments or dipping into unauthorised overdrafts has been unveiled following an agreement between Britain's major lenders and the Government.
...
The charge-free accounts are expected to be launched by the end of next year and will help those people who have been shut out of normal banking ...
Customers will be offered services on the same terms as other personal current accounts...
... nine banks ... have agreed to offer basic bank accounts ...

They agreed to offer - hence, no explanation is needed.

absolutereturn

colsten wrote: »

Do you know how much it costs a bank to provide a current account to you?

You seem to be forgetting the basic principles of banking here, the original idea was for people to place their cash in a bank for safe keeping and the bank in turn used the deposits to lend money for interest. Thanks to fractional reserve banking, that's no longer the case and the banks are instead, able to lend money they haven't got, i.e. make money out of thin air.

If everyone who has money in a bank went to withdraw it at the same time, the bank would run out of money long before everyone's got their money. This isn't a fictitious scenario, it happened to Northern Rock in 2007.

colsten wrote: »

Most UK banks have over the years funded those services by paying zilch interest on current accounts, and charging for the use of certain of their services.

Current accounts are just ONE of the many services banks offer. They also lend money: they offer mortgages, credit cards, loans and overdrafts. Interest is charged on all of them. That's where the banks make their money, amongst other things. They also offer share-dealing services where they charge commissions, etc. You get the picture.

colsten wrote: »

The costs for providing the various services won't go away, not unless everybody working in a bank agrees to work for free, and if the banks get their buildings, utilities, computing facilities, etc etc etc also for free.

Since banks are able to lend money they don't even have, and charge interest from it, not to mention the profits from currency exchange spreads, etc. they have no trouble covering these costs and no reason why they should charge people for letting them have their money.

Banks don't promote basic accounts too much because there's no money in not lending money, they want to offer current accounts with overdrafts because they can charge quite a bit on overdrawn balances, even with a small overdraft.

The Nationwide does do a free basic account for people with poor credit but it may not be suitable for the OP if they previously had problems with them.

colsten wrote: »

Where do you want to stop? If our local bank cashiers should work for free, surely they should be getting free food, clothes and shoes in the supermarkets, free bus tickets and free cars to get to work, and free houses, pensions and funerals. Who will pay for the upkeep of their Branches? Who will pay for their IT facilities?

So bottom line is we need to be a bit real.

Indeed, as I noted above, that's the reality of the banking system.

colsten wrote: »

Everybody should have a current account, I agree with that. Everybody should only be able to spend the money they can afford to spend - I hope everybody agrees with that, too, as I for one will not agree to pay for someone else's mobile or electricity or internet connection etc.
Everybody should be realistic - "free for all" doesn't exist. Not even the air we breath is free - we need to pay to keep it breathable.

You and the banks are totally different things. If you were paying my bills you'd be doing so with your own money, however, the banks can make money out of nothing.

PeacefulWaters

the banks can make money out of nothing

Really, they can't.