HSBC says it could charge for current accounts

Ballard

RobM99 said:

Thrugelmir said:

Why should current account banking be free?  Services have to be paid for by someone. 

Interest the banks earn by lending our money out.  Possibly.

It’s not quite as simple as that. It’s not really my area but banks can only lend a percentage of the balances in current accounts. Liquidity regulations dictate that a sizeable percentage of e balance of current accounts needs to be immediately available so cannot simply be lent to another customer.

I believe that each bank would have its own level. I think (although I could be wrong) that this is a major attraction for banks to offer term deposit accounts.

Hopefully someone with first hand knowledge of this will be able to confirm/deny the above. 

Dr_Crypto

Were accounts always free? If you went back to the 70s or even 50s would you have got a free bank account? 

I guess fewer people had bank accounts then though and many people were paid in cash. 

EarthBoy

Dr_Crypto said:

Were accounts always free? If you went back to the 70s or even 50s would you have got a free bank account? 

I don't know about the 50s, but my TSB account was free of charges in the 70s, as long as I didn't go overdrawn.  In the 80s, the policy of most banks was free banking providing you kept a minimum sum in your account at all times, -usually £50. 

etienneg

eskbanker said:

etienneg said:

If current accounts cost banks so much to run, why ever do they bother paying such large bonuses for people to open them?

Loss leaders, hoping to cross-sell more profitable products or to generate overdraft income.

I've heard this before and I don't accept it. Supermarkets have loss leaders, but they aren't expensive things for them. They are just small items and involve very little expense but provide an opportunity for a lot of advertising. OK, so banks advertise on the back of switching bonuses but what they "sell" (current accounts) - so the argument goes - cost them a lot to run. This argument doesn't add up.

My suggestion: Regulations require them to keep a certain percentage of credits as liquid assets. If they had to pay for this money (by attracting sufficient savings) it would cost them a lot more than the measly cost of running current accounts. They can pool all the free cash they get from current account temporary balances - the more they have, the better it averages out - and use it for themselves.

Current accounts may not be the most profitable part, but they are a necessary part of their business and don't make them a loss!

eskbanker

etienneg said:
the measly cost of running current accounts

Oh yes, that'll be it, of course it hardly costs anything to run current accounts, just as well all those branches, staff, datacentres, websites, massive IT/telecoms infrastructure, security, compliance, training, bad debt, fraud provisions, card management, ATM estates, etc, etc, etc, don't come with a price tag....

msallen

Dr_Crypto said:

Were accounts always free? If you went back to the 70s or even 50s would you have got a free bank account? 

I guess fewer people had bank accounts then though and many people were paid in cash. 

I remember my (NatWest) account changing from chargeable to free - I was probably around 18-ish at the time so mid 1980s.

Ergates

etienneg said:

This argument doesn't add up

etienneg said:

Current accounts may not be the most profitable part, but they are a necessary part of their business and don't make them a loss!

You're stating that based on your extensive experience in running a high-street bank are you? Perhaps you could share some of your wisdom then and tell us: How much ,exactly, does it cost a bank to run a current account?

The words Dunning–Kruger spring to mind for some reason...

JustAnotherSaver

Jesus, reading this thread it's like a bloody court room.

Person 1 says XYZ

Person 2 comes to counter person 1 saying you're wrong it's ABC

Person 3 comes in to take them both on.

Has everyone finished measuring it yet?

born_again

Ergates said:

You're stating that based on your extensive experience in running a high-street bank are you? Perhaps you could share some of your wisdom then and tell us: How much ,exactly, does it cost a bank to run a current account?

The words Dunning–Kruger spring to mind for some reason...

That sort of costing in Highly classified information. Would see a employee sacked.

Right. So lets look at your bank account.
What do you get for it?
Internet banking / Banking APP.
Direct Debits/Standing Orders.
Card payments.
As a quick of the top of my head.
Do you think that IB & APPS cost anything to develop & run?
Do you think that the systems that run the accounts cost anything to run?
Do you think that the data center's are free & all the computers needed to run the systems are free?
Do you think that ALL the staff that deal with DD's & card payment problems are working for nothing?

The cost of running current accounts just on regulations alone is massive.
Our banking/Cards team is over 200 people & even then as we are a regulatory requirement & not a cash generating cow it is the bare minimum that they really get away with & can not support any big problems, without long delays.

When was the last time you opened up a new current account & not asked if you would like a Credit Card or any of  the other products that as sold by banks now?

A bank account that is not used, even if it has a positive balance costs more to run than one that is used.

gsmh

JustAnotherSaver said:

Jesus, reading this thread it's like a bloody court room.

Person 1 says XYZ

Person 2 comes to counter person 1 saying you're wrong it's ABC

Person 3 comes in to take them both on.

Has everyone finished measuring it yet?

That's what they're like on here. Makes me laugh. I really think some posters live their lives on here and that's why they keep shouting "Get off my lawn!", or words to that effect.