Free banking a myth, Which? report says

[alp227]

Source: The Guardian

The consumer group Which? has warned that some bank customers are paying up to £900 a year in charges while others miss out on hundreds of pounds in lost interest.

The group said it had uncovered huge variations in the cost of "free" current accounts between banks which shattered the myth that Britons enjoy "free" banking. Charges for going overdrawn for two days a month without permission range from £120 on Halifax's reward current account to £900 a year on the Yorkshire/Clydesdale Bank current account plus.

Even customers with authorised overdrafts will rack up significant charges, with many banks – including RBS/Natwest and HSBC – charging an APR of 19.9%, higher than that charged by some credit card providers, Which? warned.

The findings come as banks suggest the way to avoid future industry scandals is to charge for current accounts, and a senior executive at the Financial Services Authority said regulatory intervention might be needed to instruct banks to charge for current accounts.

Read more: http://www.guardian.co.uk/money/2012/aug/21/free-banking-myth-which-report

[dmallind]

1. Since when did free banking supposedly include free loans without applications?

Free banking means no monthly charge and free checks. Hopefully access to e-banking too. Overdrafts on the other hand are loans without bothering to apply for them. Even officially evaluated and granted loans carry charges. Loans just grabbed unilaterally certainly should. That's not "banking" - it's sticking your hand in someone else's pocket without their ok. Overdrafts not prearranged SHOULD be charged.

[Nuclear Unicorn]

2. But banks are universally evil without exception

If they charge you for a service that just proves how evil they are. Or so I'm told.

[mwooldri]

3. This relates to the UK banking scene.

In ye olden days, you could have a free bank account *and* have fee free overdrafts up to a certain amount. But quite some time ago... like back in the 1970s... they started putting on fees.

Either the Which? (UK equivalent to Consumer Reports) article is stuck in a timewarp or it is stating the obvious.

[Smilo]

4. We are with USAA

we have an arrangement that if ever we are overdrawn, and it has happened, they take from our savings account.

I think that the point of the Which? article is that banks are being dishonest in not saying upfront what will happen if an account is overdrawn. Banks make huge profits from our money, but when people need to "borrow" because they are overdrawn they are penalized very heavily. There used to be overdraft protection - what happened to that?

This is a banks' world, this is a banks' world
But it wouldn't be nothing, nothing without a customer to cheat.

[dipsydoodle]

5. "not saying upfront what will happen"

Last edited Tue Aug 21, 2012, 02:12 PM - Edit history (1)

more like their customers here in the UK not bothering to read the terms. A lot fell for this when some of our banks offered "platinum" accounts with freebies thrown in but changes to overdraft fee too.

Some details here : http://www.thisismoney.co.uk/money/saving/article-2085187/Its-war-Banks-battle-current-accounts-cash-bribes-0-deals-freebies.html The free travel insurance was flawed with some not qualifying due to illness or age.


Changes are expected to occur if and when investment banking is split off when its likely that normal everyday current accounts will bear charges if the account falls below a certain level.

[sarcasmo]

6. The banker extortion continues and it doesn't matter what country

you live in.