Interest rates vrs overdraft rates
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JoshyBoy_2
Posts: 104 Forumite
Why is it so disproportionately in favour of the bank?
The amount you get charged for being overdrawn vrs what you earn in savings seems so unfair to me? I realise banks need to be profitable but why is there such a large gap?
I have savings of £3,000 which gets 0.3% interest, yet if I was to go overdrawn I'd be charged the Earth.
Ultimately isn't a savings account the bank being overdrawn with you? So why aren't they equal, or closer to each other in terms of interest? The whole thing is unjust.
The amount you get charged for being overdrawn vrs what you earn in savings seems so unfair to me? I realise banks need to be profitable but why is there such a large gap?
I have savings of £3,000 which gets 0.3% interest, yet if I was to go overdrawn I'd be charged the Earth.
Ultimately isn't a savings account the bank being overdrawn with you? So why aren't they equal, or closer to each other in terms of interest? The whole thing is unjust.
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Comments
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An overdraft is supposed to be a very short term loan, such as to cover a few days between a payment and an income.
Think of the price difference between a daily hotel room, and a monthly rented house.0 -
Banks exist for no other reason than to make profit, thats the bottom line, mostly they offer services and products that benefit them, not the customer.
Yes they now have to put on the public image of a "caring bank" or whatever the "in pun" may be, and i must admit, some banks are better than others at the publicity game, but as past events have shown, I`m thinking the PPI scandle, charges for packaged bank accounts, excessive bank charges, etc banks treat us like mugs, they actively lied to us for years, and when found out, no body went to jail did they.
The reason why there is such a gap is because they just dont care about you and me, we are all just algorithms of profit and loss, no more, no less.I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter0 -
If a bank has your money, they will be able to make a certain amount by investing it, or lending it out. They won't want to give this all to you, but will split it - their running costs, their profit, maybe a little to you. If you have the bank's money, they won't be able to make anything by investing it elsewhere, so will charge you for both their running costs and their profit. Their running costs won't just include the cost of that one account, but the cost of people who borrow and then get into trouble and don't pay back in full.But a banker, engaged at enormous expense,Had the whole of their cash in his care.
Lewis Carroll0 -
Base rates bear no resemblance to most interest rates, banks throw all the best offers at trying to attract new customers same with credit cards, store cards and to a lesser extent mortgages, it hasn't always been so.0
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I'm £3000 overdrawn and paid them £47 in interest alone ( not counting other charges)
My partner reminded me that would be going straight into the account of someone obscenely rich in interest on their savings, that they don't need lol
Thanks mate!0 -
sun_city_girl wrote: »I'm £3000 overdrawn and paid them £47 in interest alone ( not counting other charges)
My partner reminded me that would be going straight into the account of someone obscenely rich in interest on their savings, that they don't need lol
Thanks mate!
Actually it'll go to shareholders, many of which are pension funds of millions of ordinary people.
If you don't want to pay £47 a month for being overdrawn then the answer is simple, don't use your overdraft spending money you don't have and live within your means.0 -
Welcome to capitalism, the economic system under which we in western democracies live. If you think it so unjust, you are free to start up a company with a business model which is more in line with your views of economic justice...and let's see how long it lasts.
Equally, you're free to live somewhere with a political and economic system more in line with your views - but they don't tend to be very nice places to be.0
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