Free banking to be axed, warns leading bank

[growse]

lol, they wouldnt be allowed to do this... people would go nutts about it just as they did when the banks wanted to charge for ATM`s. plus their would be one bank who wouldnt charge and every bugger would just move to them instead. also its the daily mail... now where did i put that salt tub...

*Sigh*

If the law mandates that banks cannot make any money from contract breach penalties, it is not profitable to run a bank which gives everyone free accounts. Sure, everyone will run to the banks that aren't charging anyone, but suddenly, that bank will realise that given the large number of customers it has, and the sudden lack of income from charges it would be getting, that it's actually losing money. Therefore it will start charging.

Once one bank does it, all the rest will.

 

[Pez]

I don't agree with you at all there - banking isn't a service in the same sense as TV or phone - both of those involve you paying to receive a service, it's strictly a one way thing. A bank account involves you investing in a bank, giving them money with which they can do as they choose. They can and do make a profit on that. In exchange, you get an interest payment - for easy-access current accounts, you get a very low interest rate in exchange for regular access to bank services, for a savings account you get a higher interest rate. Charging the consumer to invest money seems horribly unfair as far as I'm concerned.

No.

Your not investing in the bank at all. Your money is at Zero risk. There is no real way for you to lose the money. You put the money into the account, so that you can use the features ie a debit card, the ATM network, online banking, a cheque service.

If the bank choose to invest that money, then thats their choice, as any other business may invest money it recieves.

The sooner people realise that banking isnt a free public service, its a business, the better.

Debit cards are not produced for free, the staff dont work for free, the power and infrastructure to the organisation are not free... so for christ sake, if they cant charge you for a service that a large number of people are abusing daily, what are they meant to do?

Scream 'Fatcats' all you like. If people manage their money badly, why would the bank want their custom,

It will get to the stage where banks will go to your previous banks for a reference. If the other bank refuse a reference, you may find yourself in quite a pickle.

*Sigh*

If the law mandates that banks cannot make any money from contract breach penalties, it is not profitable to run a bank which gives everyone free accounts. Sure, everyone will run to the banks that aren't charging anyone, but suddenly, that bank will realise that given the large number of customers it has, and the sudden lack of income from charges it would be getting, that it's actually losing money. Therefore it will start charging.

Once one bank does it, all the rest will.

Thank christ someone has some common sense.

 

[crashuk]

i think if the bank goes bust you lose your money or your last on the list to be paid back.

 

[POB]

i think if the bank goes bust you lose your money or your last on the list to be paid back.

Your protected to about £33k

 

[Slam62]

well if everyone decided to withdraw their cash there wouldnt be enough to go around.

I dont think anything is guaranteed, its all held together by 'confidence'

 

[ANDARIAL]

when i was in school (long time ago i know )
we was told in economics class that banks could lend out 7 times the amount that you/eveyone had in the bank,something about only 1 in 7 people would want to withdraw that amount..
so surely that amounts to a whopping big earner for the banks?

 

[growse]

when i was in school (long time ago i know )
we was told in economics class that banks could lend out 7 times the amount that you/eveyone had in the bank,something about only 1 in 7 people would want to withdraw that amount..
so surely that amounts to a whopping big earner for the banks?

Think you'll find it's a *lot* more complicated than that. Banks borrow money off each other all the time, and seeing as they rate each other at the best credit rating, can borrow off each other for a very good rate (the interbank rate).

If you're looking for someone to blame for the "OMG, there's more paper than gold", look at the BoE. They're the people who issue the notes.

You're 'money' is basically a symbolic figure as to how much gold you're entitled to that's kept in the BoE's coffers. You're high street bank just looks after it for you.

 

[beh]

when i was in school (long time ago i know )
we was told in economics class that banks could lend out 7 times the amount that you/eveyone had in the bank,something about only 1 in 7 people would want to withdraw that amount..
so surely that amounts to a whopping big earner for the banks?

There isn't a required reserve ratio for UK banks and although it varies I believe the average is surprisingly low at only a few percent. Nothing much to worry about though, as growse points out, plenty of other institutions they can borrow from to meet requirements including the BoE which functions as lender of last resort.

 

[FreeStream]

Erm, what happens to us youngens with bank accounts?

They really gonna charge someone with £1 in there bank account?

(I dont now, but since 2002 I had £2/3 in there...)

So if this is true would I have to pay or would there be a cut off point?

 

[growse]

I imagine it'll be free for those under 18 and those on a low income.

 

[alx]

Interesting article about banks profits from customers:

http://news.bbc.co.uk/1/hi/business/5235988.stm

 

[wormwood]

As long as my money is in the bank they are able to make more money from it, why should I pay them anything when they are already making profits from my savings? The only real benefit I get from banking is my money being somewhere secure, if they are going to charge me for actually loaning them money then why shouldn't I buy my own safe.

 

[z3b3dy]

As long as my money is in the bank they are able to make more money from it, why should I pay them anything when they are already making profits from my savings? The only real benefit I get from banking is my money being somewhere secure, if they are going to charge me for actually loaning them money then why shouldn't I buy my own safe.

Inflation.

 

[Samtheman1k]

Inflation.

But most banks give you, like, 0.1% interest on your current account, and about 2% on your bog standard instant access savings *. That doesn't even cover inflation.

I think he has a point, I chose to invest my money in the bank, and they invest it somewhere else for their own gain, in return, I get to withdraw my money when I want through branches etc. Why should I have to pay for the ability for banks to make money off me?




*Yes, I know some banks do pay better rates of interest, but high interest rates on current accounts is a relative new feature...

 

[Samtheman1k]

Interesting article about banks profits from customers:

http://news.bbc.co.uk/1/hi/business/5235988.stm

From that article:

banks have the highest annual profit per customer figure than any other UK industry - £75 per year compared with £59.10 for utility firms and £43.20 for mobile phone companies.

I suddenly don't feel so sympathetic to banks...

 

[Surfer]

Good. I have predicted it in all the tripe "lolz I beat the bankz n got bak meh chargeez w00t!!!!!111one" threads and lo and behold, Good old Dufrig comes out with it. Three VERY important paragraphs in that sensationalist tripe from the daily mail are as follows.

Well guys,

A few months ago I wrote a letter asking for my bank charges back (over £1000 over 6 years) - today I received a very nice letter saying I could have the lot back.

All I did was go the bank action group forum and follow their step by step instructions - not bad for 5 minutes work!

So anyone that has been stung by charges - go get em!

WOW i had a quick look at your thread and if this is viable and true...then WOW i should be able to get back the mountains of charges (easily £2k over the years) my bank charges me. I get charged all the time and often it is their very charges which take me over my limit (which of course leads to more charges) The last time i tried to take it up with them (round about when the ombudsman/ watchdog reported that banking charges were unlawful) i asked them for a breakdown of their charges and the manager fellow i was speaking to (aged about 21 from the looks of it) just said thats how it is and you just have to pay it and refused to impart the details.

but i shouldnt get my hopes up!

ill look into this anyway thanks!!!!!!!!!!!!

 

[Kitchster_uk]

From that article:



I suddenly don't feel so sympathetic to banks...

How about, from the same article..?

Italy - 131.60 euros per customer
Spain - 123.60 euros per customer
UK - 109.80 euros per customer
France - 98.40 euros per customer
Germany - 98.20 euros per customer

SOURCE: Group 1 - Average banking profit per customer


If the average is only £75 per customer and I say only as you have to consider how many products pople have with banks. Some people (like me..) run, with the same bank...1)Current Account, 2) Savings, 3) Personal loan, 4) Credit Card, 5) Mortgage, 6) Investment ISA 7) Life cover, 8) Income Protection... the list goes on.

The utilities companies provide you with one, maybe two things and yet they make nearly £60 a year from you. Which is better value???

 

[LoadsaMoney]

Oops read the title wrong, was gona say they can't axe that, it costs me nowt, and they don't know when im having a one.

 

[semi-pro waster]

If the average is only £75 per customer and I say only as you have to consider how many products pople have with banks. Some people (like me..) run, with the same bank...1)Current Account, 2) Savings, 3) Personal loan, 4) Credit Card, 5) Mortgage, 6) Investment ISA 7) Life cover, 8) Income Protection... the list goes on.

The utilities companies provide you with one, maybe two things and yet they make nearly £60 a year from you. Which is better value???

I can't see from that article exactly what they are including in the profit made but some or all those services you list already cost you money(directly or indirectly) as a monthly/quarterly/yearly fee. The relationship between a bank and a customer is also slightly different from that of a supplier(gas, electricity etc) and customer. The bank provides a service but they also get your capital to do with as they choose providing they can pay it back to you on demand whereas a supplier simply provides a service for cash. A bank and customer could be an example of a mutually beneficial relationship because both parties are supplying a service in the relationship but this isn't quite the same as a supplier.

This is a fairly simplistic way of looking at it but the article doesn't go into much depth either so I can't tell what is or isn't included in the profit figure or whether they have factored in that they use customers cash for investing etc.