Sunday, Mar 07, 2010
Inevitable
Timesonline: Virgin’s threat to free banking
THE era of free banking may be drawing to a close after Virgin Money said it plans to levy a charge for current accounts when it launches its banking services this year.
In an interview with The Sunday Times, Jayne-Anne Gadhia, its chief executive, revealed plans to charge a low monthly fee rather than impose high overdraft charges or require customers to pay in regular monthly sums.
It would be the first bank to charge a compulsory upfront fee for all accounts, no matter how much you pay in.
Posted by dill @ 09:53 AM (744 views) Add Comment
12 Comments
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1. paul said...
Nope. This won't change anything. the people being crippled by Halifax's £2 a day authorised overdraft fee will figure out "hey that's cheaper" and move.
Free banking, like free online shopping or free TV listings once given, cannot be taken away so easily.
2. stillthinking said...
So presumably there will be a legal right to receive wages in cash, and an inflation target of 0%. Otherwise we all get ripped off.
oops..
3. alan_540 said...
Nationwide building society offer free banking, I suspect they're going to become very busy if this happens.
4. vacuouspolitician said...
lol Ah...the good old days of receiving cash in a wage packet might just be returning...
I'm sure all the people on this site will give this account a miss...
5. dill said...
Of course, the new (more solvent) entrants to UK banking will dictate terms and the busted, but supported old entities will follow suit. The game will be to attract the 'good business' by offering a better interest rate on current accounts to offset monthly fee. The banks will make money off the less liquid, while reserving the right to refuse accounts to those who don't profit them. With the need for deposits in the future to supply lending ( the conventional bedrock of banking business, in the absence of large wholesale funding), the premium will be on customers with well funded accounts, rather than debt revolving and far riskier account holders. Get used to it. No more free lunches in this country.
6. mrmickey said...
I think it is interesting that when you got paid in cash it was your business what you did with your money, now it has to go to the bank first who then monitor your bank account and if things aren't to their liking may not give you access to your money. the only real money you have is the cash in your pocket the money in the bank is only available at the banks discretion as we saw in the banking crisis.
7. fallingbuzzard said...
Dumb journalist. Banks make money on more or less every transaction we make. Free banking is fiction. Potential costs that are visible are made free (monthly account fee) and money is taken elsewhere (debit card transactions, direct debits) so that costs are shifted around the network and land back on consumers ultimately. What they mean here is slightly more expensive banking, which you can already get if you look for it.
8. holyroller said...
@Fallingbuzzard - yeah free banking has always been a myth, there is always a cost. When I lived in New Zealand there was a small (a few pence cost) for every transaction, withdrawals and such (although you would get a few free transactions per month), but it was a much more open system so you kind of knew where you stood. Also you adjusted your banking accordingly.
I love the advert on TV where you get a £5 reward for depositing £1000 or more into your bank account, what they fail to mention is that you have to pay £12 a month for the priviledge. lol
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