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Bank accounts aren’t free, so why don’t we pay upfront?

Man holding a sign saying 'free'

How much do you pay for your bank account? Think about it for a second. You may not pay any upfront direct fees for your account, but the reality is that you do pay. ‘Free’ banking is one of the industry’s biggest myths.

The vast majority of us operate our bank accounts under a free-in-credit model. If your account has a positive balance, you won’t pay a penny.

However, if you head into the red you will start to incur charges. This may be due to interest paid on an authorised overdraft, or fees paid for entering into an unauthorised overdraft. Or you’ll get hit by charges for using your card overseas, or to pay for money transfers. Not so free anymore eh?

Do you pay for your bank account?

And for those of us still sitting pretty with a positive balance, it isn’t all smiles. Are you earning any interest on that savings’ balance? Who gets that money? Free isn’t starting to seem so free any more is it?

Indeed, in 2008 the Office of Fair Trading found that people paid on average £152 a year for their bank account. And the bulk of that sum comes from the lack of interest you receive on your money.

When you think about it though, it makes sense. There’s no such thing as a free lunch and neither is there such a thing as a free bank account.

Current accounts have to be paid for somehow. There are clearly costs involved – operating branches, stocking ATMs and processing direct debits all cost banks money and these costs are passed on to us.

The trouble is, because these costs are all passed on via small print charges and the interest you miss out on, it’s not easy to figure out how much you’re paying and whether you could get a better deal elsewhere.

The illusion of ‘free’ banking

And the banks aren’t doing much to illuminate the situation. When a recent Parliamentary enquiry asked them how much it costs to provide current accounts, senior figures from the big banks weren’t able to answer.

Yet, when attempts are made to toughen up on consumer protection, such as moves to limit unauthorised bank charges, the banks threaten ‘the end of free banking’ and a new world where we’ll pay upfront for bank accounts.

But is that threat just a big game of bluff? The current system suits the banks down to the ground. It lets them hide their charges and avoid competing on value.

So maybe we should wonder whether upfront charges could actually make the banking system work better. After all, it would make us start paying attention to what we are paying, and show us when banks aren’t giving us a good deal.

Would you prefer an upfront charging model where all bank account fees are clear and transparent? Or would you like to keep the current model and retain the illusion of ‘free’ banking?


We should all pay £4.99p a month for all basic current accounts,

But that should mean free overdrafts & no charges if You ever go £0.01p – £2000.00p overdrawn, & Some other perks.

I recieved & claimed back all My unfair & unlawful penalities/fees/charges from My old Abbey Bank & Got back over £1600.00p & Since then I have also made sure I write to My bank for all the unfair & unlawful charges/fees/penalities to be repaid back,

Me,My Mum & My step-dad all made our claims before it became cool to take You bank to court over these charges/fees/penalities & Way before the big court case from various watch dogs,

Its because we all knew they were unfair & probably ilegal bank fees/charges/penelaties as they were making profits on them & thought certain acts didn’t apply to them,

But as Myself,My Mum, & My step-dad were all working in good jobs & some big companies, None of us could be asked to fight these unfair & illegal charges,

When I lost My job, I needed every penny I could find & claimed back all My unfair & unlawful bank charges/penalities/fees over some months in 2005/2006 – 2007, I think.

I now hardly get any charges/fees/penalitis, As I pay £25.00p to HSBC Bank Plc, I didn’t always have to pay for My HSBC Premier Bank Plc Account, But I do now, As I don’t meet the free section/s any more.

I am also Now £9.50p to COOP Bank as of this month 2011,As I joined The COOP Bank last month & I’ll be closing down My Abbey Bank Plc account,Once I make My complaint as to why all My 3 Debit Cards were sent to Bournemouth Abbey Plc Bank Branch & 2 cash cars there & They ignored Me over the phone & Said they couldn’t look in to the errors or seem to care.


The “small print charges” are all unenforceable under common law in England and Wales.
Not one single bank has ever produced a factual breakdown of what each charge is made up of.
Quite the opposite in fact, when the British Bankers Association stated in front of a parliamentary committee years ago, that the money a bank writes off each year, is recouped by the charges it issues on its customers on use of their accounts!

The fact is, laws are in place that are being ignored by banks and not being enforced by taxpayer funded quangos.
Self regulation doesn’t work and no matter which way the argument goes on charges, the public end up bearing the brunt of the losses a bank suffers.

The thing to remember is that any charge issued to a customer (regardless of any stipulation in any contract), must only recover ACTUAL loss.
If it fails to do this or cannot be proven, then the charge is deemed to be a “Penalty charge” – legal precedent going back around 100 years clearly states that a “Penalty charge” is unenforceable under common law (England and Wales)

FSA, European rules, are all smoke screens and fob offs, banks and their association (The BBA) argues about interpretation of FSA rules or guidelines, etc, which are under common law, completely irrelevant!

After a decade or so of being forced into using bank accounts for everything, people are starting to wake up to their rights in law and rightly demanding banks either put up or shut up over charges, etc.


Years ago – I had a Midland Bank account – I used to get a “Sundries” charge of around £7 every couple of months – every time I queried it they dropped it.without explanation – a year of this I changed banks.

Now with First Direct – my current account does not accrue interest (the interest actually being used to offset costs) I’m happy with that as the service is excellent


You are aware that Midland Bank was or now is HSBC Bank Plc & Also owns First Direct, Right?.

But glad Your happy with First Direct Though 🙂


Yes – In fact I was one of the first computer geeks who operated the pilot scheme of First Direct by Midland to analyse the probability of an actual online operation before the World Wide Web was born – using a Bulletin Board setup with a 1200/75 baud modem.on a BBC A computer in the very early 1980s.

The sundries charge was a factor of billing by the individual branch of Midland not a general policy – so I switched to on-line Banking 20 odd years ago and never regretted it. First Direct is First Class.


I’m more worried about the charges that the banks hide from us even more deceitfully: the charges that they make to businesses for the privilege of receiving payments that we make for goods and services by any means including cash cash and which are passed on to every customer of every business the world over by being added, in minuscule amounts, to the mark up on the goods and services we are buying.
For anyone in any doubt as to what these charges and expenses are, look at the threads about abolishing cheques (the cheapest payment for companies and traders to accept) and read about the cost of having cards processed and of having the rip-off card terminals.
As customers of the banks we will never be able to find out what these charges are because they are not levied against us directly, and we will all pay way in excess of what our own bank charges because the vendors’ mark up is based on the sum of ALL charges that they pay for dealing with ALL of the banks and card companies that they have to deal with.
The worst of it is not that these charges are very cleverly hidden away but that the banks are rigging the world of payments to ensure that it is as hard as possible for us to pay by the methods which are cheapest for the retailers to process (cash and cheque) and forcing us to use the most expensive methods (Debit and Credit cards) more and more.
As for the “free” current accounts, of course they are not really free and never have been, but I can (just) remember the days when the high street banks were phasing out up front charges and battling against each other to win customers with the temptation of a “free” account and I would hazard a guess that the reason they did this was that too many people had grown to understand that the up front fees were unenforceable and so the banks wanted a more discrete (deceitful) way to charge that would be harder to contest. Incidentally, this happened at almost the same time that the ATM was widely introduced – possibly the cost of these being rolled out was the incentive for the banks to want to hide charges so they could make more money from them?


Why should I pay the bank for “looking after” my money? They use it, while they have it, to make money on “the market”. They have been gradually de-personalising their services to focus on simple money management i.e. closing branches; they introduced cash machines to lower their costs – and also made it easier to get my cash; and they constantly play around with saving interest rates and savings account names to fool me into leaving my savings in a lopw rate account.
I keep track of what is in my account so that I don’t have to borrow from the bank – i.e. no overdraft. So why should I have to pay because some people don’t live within their means and borrow when they don’t want to pay market interest rates. The banks are not a charitable foundation, and nor am I. They do make money from running current accounts, so I don’t expect to pay them to make even more.



You say why should You pay banks for looking after You money, But the point is they haven’t really been looking out for the customers or our money/monies/funds & Been spending it incorrectly & Making us The Uk tax payers to pay for there mistakes, & Still charge us all unfair & unlawful charges/penalities/fess at an average of £25.00p – £45.00p, When most insiders in certain banks said the true cost was only around £1.75p for sending automatic fine/fee/penalities/charges letter.

It would even go past £4-£5 if You sent the bank charges/fines/penalities/fees by Royal Mail Group Ltd Special Delivery & That’s where its hand delivered & needs signing for from depo to customer,

So sending leters 2nd class stamp pre-paid & having automatic software that prints & puts letters in envelopes wouldn’t cost £25.00p – £45.00p in cost of envelope,letter,ink,& auotmatic sending letter machince & Thats why Banks LOST, As they were making profit on the fines/fees/penalities/charges automatic letters & That’s not allowed under certain acts/laws & Banks tired claiming it didn’t apply to them & It does & Has, Hence why they lost.

So Banks haven’t been taking care of our money/monies/funds, So it makes Me LOL At Your response.