The Bank of England reduced their interest rates to an all time low of 0.25% recently, and we have been waiting to see what impact this will have on us as Bank Account Holders.
Two weeks ago, we received a letter from our bank informing us of changes to the terms and conditions of some current accounts, and we responded by asking them to leave our account as it was. We pay in, we have cards to draw out or pay for our shopping, a cheque book, a couple of regular bill payments and a small overdraft facility, which we’ve never used. Perfect. Leave it alone!
In my banking days, bank charges were applied for each cheque you wrote, for writing cheques not covered by sufficient funds (bouncing) or unofficial overdrafts.
Businesses were charged for the number of cheques they paid in, and had a different scale of charges for the rest.
Stopped cheques (loss, theft of a cheque book or dispute with the payee) were free of charges, but if you had used your cheque guarantee card for the latter, tough luck.
Pretty pictures of animals or country scenes were also available on your cheques for an additional fee.
Of course these were only pence charges, not the pounds banks charge today.
Free banking for private individuals was introduced over 30 years ago (source).
I remember initially accounts had to maintain a balance of £100, then only £50 in competition to attract new customers. Eventually, provided your account stayed in credit, every bank adopted the same policy and made no charges at all, unless you wanted a bank transfer made the same day or pay money abroad.
Times are changing, and the days of free banking are rumoured as being numbered.
Already, savers have been hit with reductions to a pittance in interest though better rates are available if you are able to tie up your money for a set period. For people like us, instant access is probably the norm, so we are on the lowest rates.
However, some banks are now about to introduce Negative Interest, where the depositor is charged for having money in their account (source).
OK, the plan is for this to be applied to large depositors only, but like everything else, Joe Public is more than likely to be included eventually.
Most people have to have a bank account. It is a place for wages, benefits, pensions, annuities and the like to be paid into.
It is a handy way to pay bills by direct debit, standing order, bank transfer, or by writing a cheque, although many establishments no longer accept cheques in payment, especially since the abolition of the Cheque Guarantee Card in 2011 (source).
If banks were to suddenly introduce charges to all account holders, there is more than likely to be a run on the banks concerned as people withdraw their money in droves.
Cash machines would dry up as customers took the maximum withdrawal already in place, and maximum cashback transaction facilities available through a variety of stores would rocket.
Most banks are unprepared for large withdrawals without notice, so in just a few hours, branch cash reserves would be depleted, and they would have to close their doors.
TPTB may have considered having a cashless society some years back, but can you imagine a Bankless one?
And what happens to your money that you can’t take out?
IMHO, banks are in business for one reason: profit. Ditto for insurance companies. While I must deal with both, they annoy me. IF our bank dares to impose negative interest, I shall close my accounts and put everything in the credit union… and pray they don’t follow the banks’ example.
I wouldn’t blame you. We would close our accounts, but not sure where we’d go for an alternative.
When we lived overseas, some people used internet banks, but I don’t recall the names. Apparently, they have less overhead (less real estate, etc) and different laws. You might want to ask if anyone you know uses them.
Internet banking is very popular over here, and we know several people who use it. We are not keen though due to the problems with hacking and fraudulent access. Our bank actually has one of the worst records!
Good luck sorting out this problem. IF a bank is solely on the internet, I would think its cyber security would be stronger than an institution that divided its attention between cyber and brick/mortar.
Reblogged this on O LADO ESCURO DA LUA.
In Australia the banks are actively bringing in a service charge if you need to deal with a banker. I went into a bank recently back in Oz and was surprised to see there were no tellers. There was a desk, a laptop on the desk and a phone. There was a Customer Service member available but they suggested (on two separate occasions) that I use either their computer to complete my transaction or use the card machine.
In Turkey there is a banker for every single item you do. Cards. Banker. Withdrawal. Banker. Signing something. Banker. Cup of tea. Banker. I cant imagine them every catching up when I have difficulty trying to get my internet banking set up!
Tellers are not available at branches on a Saturday (if open), and many banks have a machine for normal transactions such as paying in, taking out, checking balances, account transfers, direct debit and standing order cancellations or amendments. High Street Banking is nothing like it was when I was on the front line.
Times they are a’ changing
They sure are.