Why a bank charges win doesn’t mean the end of ‘free banking’ blog discussion

This is the discussion to link on the back of Martin's 'Why a bank charges win doesn’t mean the end of ‘free banking’ blog. Please read the blog first, as this discussion follows it.



Click reply to discuss below.
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  • arisaris Forumite
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    Well said Martin. Quite frankly, if banks started imposing fees for things like direct debits, and writing cheques, they know very well that they would loose customers left and right. In fact I personally would change banks so quickly, it would make their head spin.

    Don't be bullied by banks!
  • kezbabybabekezbabybabe Forumite
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    I agreed that we all need to manage our finances better. I for one have never been any good at ensuring I spend under my means.

    New plan this year is to be better at spending (or not spending) and so far I have saved £21.38 from January's wages, which is excellent for me. :T

    Bring on February's wages, I'm sure to save more money there, so hopefully I'll be able to buy one of my "luxury" items at the end of the month, as there'll be enough to fund it.

    This site is fantastic, lots of plain English common sense and reminders to help everyone through it.

    Keep up the good work Martin, I'm looking forward to tomorrow's It Pays To Watch!
  • aris wrote: »
    Well said Martin. Quite frankly, if banks started imposing fees for things like direct debits, and writing cheques, they know very well that they would loose customers left and right. In fact I personally would change banks so quickly, it would make their head spin.

    Don't be bullied by banks!

    If all banks worked this method which ever bank you went too would be the same.
  • :money:
    The well-managed account holders who the spin says “will lose out” are actually, if anyone were to lose out, the least likely to. That’s because they’re the ones the banks want the most.

    I must disagree - the "well-managed" account holders do not pay any interest, fees, etc, and thus do not make any money for the banks - why should the banks want them the most? What the banks want are the ones who use their overdraft regularly, incur fees etc. Obviously, they are not looking for completly irresponsible borrowers who won't pay back, but the "perfect customer" is not "well-managed"
  • Great read Martin.... this hasn't and will not put me off fighting for my bank charges, and my PPI on two loans and a credit card. I have even got the bank doing an investigation as to how they put me overdrawn by paying a cancelled direct debit so they can't seem to manage my money either.... I hope to have more news on banks disregarding the Direct Debit Legislation..and how to make a fuss about this.
    Proud to have my head out of the sand and managing my finances.:D
  • I understand what you are saying about the bank's best customers aren't always the one's who keep their accounts out of overdrafts etc, however the banks make millions on investing peoples savings, loans, credit cards and other fees ...and exactly what martin said ...look at the interest rates standard accounts accrue compared to what they accrue for themselves as a business... banks are big businesses, they thrive on good and not so good customers...
  • Mark7799Mark7799 Forumite
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    acwalters wrote: »
    :money:


    I must disagree - the "well-managed" account holders do not pay any interest, fees, etc, and thus do not make any money for the banks - why should the banks want them the most? What the banks want are the ones who use their overdraft regularly, incur fees etc. Obviously, they are not looking for completly irresponsible borrowers who won't pay back, but the "perfect customer" is not "well-managed"

    Because the information that passes through their current accounts offers a load of data mining possibilities for the Banks to sell them further products (savings accounts, mortgages, insurance, loans etc) and the Bank will know the likelihood of default is low because they have seen the way the account is operated.

    I believe those who will lose most are those who just keep their accouts in credit, work hard, balance their books, do not use unauthorised overdrafts but don't have much disposable income for the Banks to be able to cross-sell further products or services.

    Remember when First Direct floated their ideas a while ago - charge £10 per month unless either
    1. You had additional FD products OR
    2. You paid in at least £1500 per month to the account

    Customers who haven't got the spare cash to do the former or earn enough to do the latter are the ones who will lose most.
    Gwlad heb iaith, gwlad heb galon
  • If Banks started to charge for Direct Debits, as this is the prefered method of payment for all utility bills and bills in general i would have to pass this cost over to the company concerned!
    If companies can pass on higher running costs to consumers etc etc then the same will appy to them when my costs go up as a result of their prefered payment methods. The same goes for paying bills i.e credit cards, to banks using the DD method.
    I will simply submit at the end of each financial year a bill for all the DD charges that will have been incurred by myself for payment of their bill. If they don't pay it then legal proceedings will follow as they no doubt would to recover any debt oweing to them.

    Would this actually work if EVERYONE joined in??
  • If Banks started to charge for Direct Debits, as this is the prefered method of payment for all utility bills and bills in general i would have to pass this cost over to the company concerned!
    If companies can pass on higher running costs to consumers etc etc then the same will appy to them when my costs go up as a result of their prefered payment methods. The same goes for paying bills i.e credit cards, to banks using the DD method.
    I will simply submit at the end of each financial year a bill for all the DD charges that will have been incurred by myself for payment of their bill. If they don't pay it then legal proceedings will follow as they no doubt would to recover any debt oweing to them.

    Would this actually work if EVERYONE joined in??

    No it wouldn't. You have a choice of how to make payment to the company. They would just stop giving discounts for people paying by DD.


    I consider I have free banking. I have never paid to make a payment, I have never paid for an overdraft or overdrawn account. I always keep my money in top saving current accounts, and any extra in high interest savings accounts. My banking is paid for by people that are less careful.

    If the banks lose and are only allowed to charge minimal fees for overdrawn accounts, then why don't the banks charge say £500 per year for a bank account. If you remain in credit for the full year and pay in your salary (or £1500 per month), then they could give you a bonus of £500 back at the end of the year. If you do not pay in your salary or go overdrawn just once, then you lose your bonus. That would not be paying over the odds to go overdrawn, since it would formally cost nothing to go overdrawn.
  • I wish I was as confident about this issue as Martin. Whether it is 'free banking' or 'fee free banking' it's still free banking for those in credit. It's just terminology/semantics.

    I believe that it will be the end of this free arrangement and the argument used will be that the rest of Europe charges for current account fees. I expect the banking industry will act in the same way as the utility companies. When one starts charging, the rest will follow. There will still be competition in the market because the charges and services will vary from bank to bank.

    I really believe that this will happen and possibly by the end of the decade. Lets wait and see who has egg on their face shall we?

    When the time comes, I shall definitely be pointing the finger at all those irresponsible people who cannot control their spending and accept the blame for their own stupidity.
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