Should we pay for banking

Mercenary Keyboard Warrior

Mercenary Keyboard Warrior

Mercenary Keyboard Warrior

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Good article here which discusses why we have so much issue with cross selling, at times dubious financial practices etc

Basically the banks are making a loss on our current accounts (ofc) so to make that back they have to look to other ways of making the money.

Personally I do get free banking, I do not pay any fees as I do not have any debts just short term on credit card which I pay off in full each month.
So its great for me

On the other hand maybe the whole banking would be simpler and fairer if we paid a small regular fee which mean't the banks didn't have to resort to less savoury tactics like massive fines for have a DD bounced etc.

I don't see it changing really unless maybe a bank decided to try something different, e.g virgin.

Anyway here is the link
http://www.bbc.co.uk/news/business-15764078

After hearing the short clip its certainly made me wonder if our whole system could be a lot more open and honest than what feels like a clandestine system. I mean I hate going to any bank, they all always try to work an angle to sell you something, upgrade something etc.
 
I pay for a fee free overdraft.

At the end of the day, you get what you pay for. Most of us pay nothing, so we get nothing.
 
When it comes down to it Banks are businesses and need to make a profit, (with the god damn chancellor understood that) anyway yes it may come down to people paying a small monthly charge and I wouldn't have a problem with that per say, but I don';t want to american system where you pay to use your card, to cash a cheque, to do anything really. Must really suck.

I already pay for my account in fact so that I get a insurance and other shizzle.
 
I'd pay a monthly fee but there would have to be a quid pro quo from the banking industry to justify it. We pay for most other services and perhaps the banks relying less on variable interest, penalties and nebulous "admin" charges for doing some stuff and more on predictable fees would help with stability.

I'm old enough (just) to remember having to pay for cheques and withdrawals when I first had a current account and it didn't seem a problem at the time.
 
The RBS guy is also alluding to something else, something a lot more profound. One way to prevent high risk taking is to increase the normal profits which occur without such activities.

One potential reason of casino banking ha been increased competition in the sector leading to deposit bearing accounts. They immediately cut right into banking profits and only the largest banks make profits.

In America this was known as Regulation Q.

http://en.wikipedia.org/wiki/Regulation_Q

The proliferation of instant access savings accounts offering high interest rates reduced the arbitrage profits traditional banking could make. Small banks could no longer exist as scale now became important. Instead of a variety of banks in the UK, we only have a few arguably because of this.

One method of control over banks other than core capital ratios is precisely controlling the deposit interest given. The exact technicalities of how this works I'll provide a link to in a bit.


edit:

http://strategy.sauder.ubc.ca/hellmann/pdfs/aerpaper.pdf

without graphs but everyone can access

http://www.jstor.org/pss/117285

need access
 
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I pay for our joint account but it has some good extras that we have used and paid for itself a couple of times over
 
Such charges in the retail sector is minimal and would probably cost the banks more to administer. However, I would like to see tougher bank charges on debit balances. After all, an overdraft/overdrawn account is a credit facility.
 
I pay £15 each month and get loads of benefits such as phone/travel insurance, a scheme which refunds money if I make a purchase and find it cheaper elsewhere and a free £300 overdraft. There's some more but I forgot.

Tbh its totally worth it.
 
A free, no thrills current and savings account should always be available to all. Have no issue with banks also having fees for other accounts.
 
I haven't read the article, but we shouldn't be forced to pay for bank accounts, without people depositing money in to the banks they wouldn't be able to loan out money and in turn make money.

By having a bank account in credit, you are enabling that particular bank to make money through loans (and with banking in it's current form, with a massive amount of leverage). By having a bank account in debt or having a loan you are paying the bank interest and allowing them to make money. Within that situation, the banks should be smart enough to make a profit as a whole without the need to charge a set monthly fee.
 
Having lived in Canada, with banking there I had to pay a monthly fee for my account. Further to that there is a fee every time you use your debit card for a transaction or withdrawal. You can offset the cost of this a little by buying monthly packages like 1-10 transactions, 1-30 transactions etc.

It was a pain in the arse and I really missed how simple our UK banking system is.
 
Malc said:
I haven't read the article, but we shouldn't be forced to pay for bank accounts, without people depositing money in to the banks they wouldn't be able to loan out money and in turn make money.

By having a bank account in credit, you are enabling that particular bank to make money through loans (and with banking in it's current form, with a massive amount of leverage). By having a bank account in debt or having a loan you are paying the bank interest and allowing them to make money. Within that situation, the banks should be smart enough to make a profit as a whole without the need to charge a set monthly fee.
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Very well constructed reply. The problem is if too many people borrow then the greater the exposure and there is less money to lend. It's all "clogs and wheels" and as we've seen over recent years, if one stops turning, the whole banking industry stops and with it the economy.

thebeagle said:
In the current climate, no we shouldn't have to pay!
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.. but it's okay for the treasury to up VAT to 20%?
 
I was very much a we shouldnt pay for banking myself previously but the whole point that is being pointed out here is there is no such thing as free banking.

The headline of "free banking" drives the need to cover costs undercover so hence the misselling, "excessive" charges etc that we bear should we go overdrawn etc

If we all paid a small monthly fee for no matter how many transactions the banks would have a more sustainable model and would be able to be more tightly regulated on charges for "penalties"

I know I am kind of swimming against the tide of general public hate the bankers opinion, but I am genuinely coming to the opinion after watching that and thinking we should be paying for the basics of banking and that there should be stricter "true cost" penalties etc applied for those that break the rules.

Interested how many here have value added accounts. Has anyone actually looked at the elements and seen how much those are to buy in the retail market. Last thing I saw about them showed that most people could obtain the same services cheaper if they sourced the ones that they actually needed themselves independantly. Again I would suggest its a way the banks are trying to make back the cost of the "free banking" by making their profits excessively elsewhere
 
Malc said:
I haven't read the article, but we shouldn't be forced to pay for bank accounts, without people depositing money in to the banks they wouldn't be able to loan out money and in turn make money.

By having a bank account in credit, you are enabling that particular bank to make money through loans (and with banking in it's current form, with a massive amount of leverage). By having a bank account in debt or having a loan you are paying the bank interest and allowing them to make money. Within that situation, the banks should be smart enough to make a profit as a whole without the need to charge a set monthly fee.
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That's not entirely correct. Investment banking makes FAR more profit for the banks than the retail arms. Retail arms often fail to make a profit at all. So the idea that if we didn't deposit money then the bank wouldn't make money isn't entirely accurate.

Though, as stated above I believe that everyone should be entitled to a free account and that there should be competition in that market.
 
Ahleckz said:
Though, as stated above I believe that everyone should be entitled to a free account and that there should be competition in that market.
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What some are saying is that the fact things like investment banking or underhand practices are required to subsidise retail banking is precisely the reason that there is not more competition in retail banking since it requires massive economies of scale due to the costs of branch networks, It systems, fraud prevention etc

Possibly the whole move to free banking 30ish years ago was precisely the reason we have ended up with so little competition.
 
Ahleckz said:
Though, as stated above I believe that everyone should be entitled to a free account and that there should be competition in that market.
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You make it sound like a public sector service.. Despite the government having a share in most of them (for the time being) they are anything but. We live in a capitalist state but it's your choice how you bank and who you Bank with with. There's always the option of stuffing cash under the sofa :)
 
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