/ Money

There’s no such thing as a free bank

Ten pound note jigsaw

We scoff that banking costs in other countries, like in the US, where the equivalent of our current account comes with a fee. But if truth be told, all we have here are charged accounts hidden by smoke and mirrors.

Our banks pay us peanuts in credit interest, 0.45% on average, with the likes of Barclays paying nothing and NatWest a pitiful 0.01%.

Use an overdraft and you’ll pay too – god help you if you exceed your limit, because then you’ll really know how un-free our banking is.

And then there’s accessing your money abroad. Withdraw your cash outside of the UK and most banks will charge you 2.79% or more for the privilege.

So, not only do the banks get to use our stashed cash to earn a pretty penny by investing huge slabs of capital into equities, they also get to sting us by imposing lousy interest rates, under-the-radar fees and outrageous charges if we, as loyal customers, exceed our agreed limit.

The banks say that they’re going through a rough time right now, being battered by the likes of the Future of Banking Commission and the Government’s new independent Commission on Banking. Banks probably feel they need some support, but let’s face it; they’re not going to get it from their customers, given the way we’ve been treated.

Free banking doesn’t exist. What we have is unfathomable, hidden or confusing charges and no benefits. What I’d really like to do is vote with my feet and hide my cash under the floorboards, but that’s not sensible. So instead, I’d prefer to pay a flat fee up front and have done with it. At least that way I’d know what to expect.


My Bank – First Direct – has no fee or payment and a minimum input for their current account. It is up front and open – I agree with it.

I left my last bank because they inserted “sundries” in my account statement – every time I questioned the charge – they dropped it.

Banks have to charge something to provide the service. – but it depends on the quality of the service.

As far as I’m concerned First Direct is a first class bank available 24 hrs a day using human English bank clerks on the telephone AND simple on-line access – AND regular postal statements.

Matt Campbell says:
16 August 2010

‘unfathomable, hidden or confusing charges and no benefits’

I think the ability to make payments, have direct debits etc, a debit card to pay with and get cash out wherever you want would count as a benefit.

Charges tend to be very simple too, stay within your limit and you don’t get hit with fees. What’s the incentive to stay within your limit if you’re not penalised for going above it?

There is definitely a lot of very fair criticism towards banks, but I’ve read a number of articles like this one recently that seem pointless, yes there’s no such thing a free bank, but do we really expect it to be free?

ziggy says:
16 August 2010

When the charges they make wipe out the pitiful interest in your savings – well then, you’d expect better than that. They get my money to make themselves more money – I shouldn’t have to pay them for the privilege.

Megan Jenkins says:
16 August 2010

Lloyds TSB has just told me it’s stopping paying interest on basic current accounts. I was miffed but perhaps this is more honest? 0.1% is laughable.

I would have more sympathy for banks if they had not paid their staff to sell us unwanted and unsuitable products for so long and they’re still at it – even those who are majority owned by the taxpayer! “When is your home insurance due for renewal?” – yawn – I only want to pay in a cheque.

David Michaels says:
17 August 2010

“Free banking doesn’t exist.”

I have had a bank account for the 12 years since I was 16. Never once have I paid a fee, and until 2007, the rate of credit interest was ~1%. So while free banking may not exist in aggregate, for people like me, who never incur charges or overspend, it does.

I recently bought some foreign currency in the UK at a branch of Travelex with my NatWest Visa debit card and on reading my bank statement, find that I have been charged a “cash advance fee” of £4.50. No fee was imposed by Travelex, and my own bank NatWest told me that the charge is imposed by Visa (who administer my debit card). I have money in my bank account on which the card withdraws, and I went to some trouble to ensure I would not be charged a transaction fee by Travelex for purchasing my foreign currency.
This is an absolute disgrace. Why should I be forced to pay a third party (Visa) for making a payment from my own current account (NatWest) which I ensured had adequate funds for the transaction I was about to make with Travelex. I fully understand that credit cards will make a cash advance charge, as you are effectively borrowing money from the credit card company, but if I use a debit card the funds are taken from the available balance in my bank account. So Visa are charging me around 2% (no explanation as to how the figure of £4.50 was arrived at, appeared on my statement), to withdraw money from my own bank account.
NatWest tell me that as I am buying foreign currency it is a different sort of transaction (the purchased item being currency), but how is this different from getting cashback from the supermarket checkout, where I have never been charged a fee? Even the terminology is flawed, I surely cannot be charged a “cash advance fee” for using the cash which is in my bank account and belongs to me? How can this be allowed?