Account switching guilt!

Zanderman

spadoosh wrote: »

This is part of the problem of sites like MSE. Its a catch 22. It encourages people to find the best deals, to maximise earnings and minimise expenditure. Ultimately though by encouraging people to take advantage it ultimately increases the cost for the majority.

Would bank charges be higher or lower if they didnt offer switching deals?

Regarding your last question - who can say? The fact is they DO offer switching deals. That's not the fault of sites like MSE. Indeed it has nothing to do with sites like this.

Banks are trying to get your business - your money, your overdraft, your credit card payments. The switch deals are encouraging you to switch to them. If the bank doesn't want to do it it will stop.

Some people will switch and not give the bank much business - and that's unprofitable for the bank in for those people. But most people - the vast majority - who switch will give the new bank their business - and so the bank will, overall, be making money. Otherwise the bank wouldn't offer the incentive.

Suggesting the minority who take advantage are upping the costs for the rest are groundless, in this context. Do you really think the bank might increase its fees to the majority because a (probably very small percentage) minority is switching just to get the switch incentive?

There is zero evidence, afaik, that your 'friendly' 'neighbourhood' bank would suddenly lower interest rates on credit cards if it didn't offer switching incentives. The bank is there to make money from us all, as best they can.

spadoosh

takman wrote: »

Obviously the banks make their money from the people who are paying interest on their overdrafts and paying fees for bounced direct debits etc. But these people are paying these fees due to their own mismanagement of money. They have the same opportunity as everyone else in the country to manage their finances so they don't have to pay these fees.
So by taking up the switching bonuses you shouldn't feel guilty for imposing higher charges on these people because it's their own fault they are in that situation.

Wider implication, it could be from lack of financial education, it could be from the encouragement of banks and successive government to encourage people to be in debt. I could be wrong but thought a large point of this forum was to help those who are in trouble with money (for whatever reasons), many people do without making such crass judgements and its a large reason why the site is as successful as it is.

Many people have issues due to bad investments (in particular housing) when theyve tried their best to take advice and do their research, ultimately though wider implications (bad management from say the banking sector) have led many to be much worse off.

Fuzion

Go for it, I've been with First Direct 2 years and they've been really good. (It would take a really good deal from a competitor to make me switch again).

spadoosh

Zanderman wrote: »

Regarding your last question - who can say? The fact is they DO offer switching deals. That's not the fault of sites like MSE. Indeed it has nothing to do with sites like this.

Banks are trying to get your business - your money, your overdraft, your credit card payments. The switch deals are encouraging you to switch to them. If the bank doesn't want to do it it will stop.

Some people will switch and not give the bank much business - and that's unprofitable for the bank in for those people. But most people - the vast majority - who switch will give the new bank their business - and so the bank will, overall, be making money. Otherwise the bank wouldn't offer the incentive.

Suggesting the minority who take advantage are upping the costs for the rest are groundless, in this context. Do you really think the bank might increase its fees to the majority because a (probably very small percentage) minority is switching just to get the switch incentive?

There is zero evidence, afaik, that your 'friendly' 'neighbourhood' bank would suddenly lower interest rates on credit cards if it didn't offer switching incentives. The bank is there to make money from us all, as best they can.

I spent a long time working in retail. They would regularly have sales. One year the company i worked for said no sales, were going to offer a consistent low price. This price was lower than competitors all through the year and during the sales period whilst some products could be bought cheaper at competitors the vast majority where similarly priced.

That year the company had a massive drop in sales because they didnt use the word 'sale'. Yet they could offer the products at competitive prices. This is the same mentality that you have.

The incentives are gimmicks, exactly like (the majority of) 'sale' prices which allows banks to get away with charging more for products overall. I dont know how to explain it any better. Im not going to look for facts for you, this is a common business tactic of which anyone with even the slightest bit of business knowledge understands.

takman

spadoosh wrote: »

Wider implication, it could be from lack of financial education, it could be from the encouragement of banks and successive government to encourage people to be in debt. I could be wrong but thought a large point of this forum was to help those who are in trouble with money (for whatever reasons), many people do without making such crass judgements and its a large reason why the site is as successful as it is.

Many people have issues due to bad investments (in particular housing) when theyve tried their best to take advice and do their research, ultimately though wider implications (bad management from say the banking sector) have led many to be much worse off.

It may not be a particularly sensitive comment but it's the truth and as evidenced by this site people only start to fix their debt problems when they realise they need to change the way they manage their money. Very few people get into debt after making all the right choices and doing the research; the majority of people simply get into debt because they spend too much and have no plans for a financial emergency.

But blaming banks and governments for encouraging debt is nonsense, everyone is free to make their own choices and nobody is forced to borrow money.

spadoosh

takman wrote: »

It may not be a particularly sensitive comment but it's the truth and as evidenced by this site people only start to fix their debt problems when they realise they need to change the way they manage their money. Very few people get into debt after making all the right choices and doing the research; the majority of people simply get into debt because they spend too much and have no plans for a financial emergency.

But blaming banks and governments for encouraging debt is nonsense, everyone is free to make their own choices and nobody is forced to borrow money.

So is HTB not an incentive to get in to debt? Tax free savings for deposits not an incentive to get in to excessive debt? Even the feed in tariff encourages debt in a subtle way. I agree no one is forced but when there are financial incentives it does encourage it.

Blaming mismanagement of money as the sole reason people are in debt is a complete generalistation. Redundancies have been prevalent over recent years. Successive governments have encouraged home ownership in many ways which has led to a lot of people unwillingly getting in to debt or facing restrictions on their position.

And banks for a fact encourage debt, you see its a big money earner for them. When i took out my mortgage the people at the bank seemed adamant i should also get a credit card.

People might not be forced to get in to debt, but there are lots of incentives to encourage it.

takman

spadoosh wrote: »

So is HTB not an incentive to get in to debt? Tax free savings for deposits not an incentive to get in to excessive debt? Even the feed in tariff encourages debt in a subtle way. I agree no one is forced but when there are financial incentives it does encourage it.

Blaming mismanagement of money as the sole reason people are in debt is a complete generalistation. Redundancies have been prevalent over recent years. Successive governments have encouraged home ownership in many ways which has led to a lot of people unwillingly getting in to debt or facing restrictions on their position.

And banks for a fact encourage debt, you see its a big money earner for them. When i took out my mortgage the people at the bank seemed adamant i should also get a credit card.

People might not be forced to get in to debt, but there are lots of incentives to encourage it.

People are expected to act as responsible adults and fully consider and understand what they are getting into before they sign up to it.

But getting into debt to buy a house is generally a good thing to do. Everyone I know who I have discussed mortgages with pays less than what it would cost to rent a house. So it's a no brained to buy the house and own it after the mortgage finishes instead of renting all your life. If you did loose your job then you can always sell the house and rent as a worst case scenario. So encouraging home ownership isn't exactly a bad thing.

If someone plans for the worst and builds up an emergency fund, budgets every penny they have sensibly and plans for the future then they are very unlikely to get into debt. If everyone did this the large majority of people who are in debt now wouldn't be. You just look on this forum and see the reasons people get into debt it's mostly because they are buying everything on credit and not thinking about what would happen if they lost their job or had an unexpected bill.

Nebulous2

spadoosh wrote: »

On the contrary, you should think about it. Whilst banks probably rightfully so have a bad rep its not them youre taking the money from. Its the people who have too pay more to offset the offers that your taking advantage of.

Its a kin to finding £5 in the street. Whilst yay its good youve found a fiver, you taking that fiver could be depriving the person who dropped/lost it their lunch.

Or similarly the fact that your mere existence and the life you lead in the UK deprives many others around the world. Components in the phone you have could have sever consequences to the health of the person who mined them in what is likely pretty poor working conditions. The burden of you fueling your car doesnt fall on you, it falls on the communities who are least likely to benefit.


So whilst you might think 'take all you can from the banks' the implications are much wider spread. And its this ignorance (not meaning to be rude but by definition it is ignorance) that has led us down the path we're at as a world. With massive economical and ecological problems. It takes those who carry guilt to try and buffer the consequences or those who struggle to take the advantage to deal with the consequences, in this case increased charges or more expensive products.

I'm sure you're meaning well with this, but these issues are more complicated and not anything like so clearcut as you are portraying them.

First of all the banks. Banks will have different strategies which will vary at different times. Some of them will want to earn as much money as possible by cutting costs and squeezing customers. Others will want to grow and attract more people and will be prepared to commit money to do that.

They can spend money on advertising / pay people for referrals or pay money to customers to join. Why would they pay money to customers? Because they have found it works. People like MSE will then do their advertising for them. They only do it because they have found it to be an effective way (including cost) of growing their customer base.

They know perfectly well that a percentage of people will take the money and run. Why do you think they restrict the number of bonus payments you can get?

If your premise of people having to pay more to offset the bonus was accurate, then banks who never offer payments would be cheaper. Have you seen any evidence of that?

Secondly, third world people producing components for mobile phones.

It is terrible that people in third world countries are mining dangerous materials with inadequate protection. However the alternative might well be not working, and consequently not eating, without the benefit of a welfare state.

If you genuinely want to change that, then tackle the companies who benefit, to force them to improve conditions. I've seen a figure of £240 profit to Apple for every iphone sold in the UK. They have money stashed all over the place, which they cannot take back to the States because they would be taxed on it. It would be entirely possible to improve conditions for workers, reduce the price of phones, pay more tax and still make the kind of money other companies can only dream of.

System

This is definitely one of more bizzare threads on MSE.

Profit making company offers an incentive in an attempt to profit (from you) and you feel guilty...The only incentive that I have a (tiny) issue with is Nationwide's Recommend a friend scheme - which seems a total waste of members funds.

bigadaj

If you are worried about the ethics then make the maximum amount of money from the banks, I partially agree with Heng lengs comment about nationwide, and then use the money in an appropriate way. Donate some to charity, spend in small local shops that need your support, or local pubs or theatres maybe, be a modern day robin hood and reap the benefits!