Should free banking be abolished?
A Bank of England official has suggested that free banking should be abolished. Does that really make sense?
The idea that banks should be forced to charge for a service they currently offer for free might seem odd.
But there is an argument for the idea. Because the banks don't charge a fee for the majority of current accounts, they're arguably forced to generate revenue via other routes. So we've seen very high penalty fees for late payments and such like as well as very high interest rates and charges for unauthorised overdrafts.
There's also the fact that most free current accounts pay very poor interest rates for any credit balances.
So the Bank of England official, Andrew Bailey, has suggested that an end to free banking could create a market where current account charges are transparent and fair, and no one suffers unduly.
Of course, the opposite view is that free current accounts are a great boon for many people. If you manage your current account carefully, there's no reason why you should pay any charges for your current account at all.
The two golden rules for free banking are simple:
- keep your account in the black at all times
- make sure you don't leave large deposits sitting in your current account earning paltry levels of interest.
What do you think? Tell us in the comments box below.
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There is no such thing as free banking. We lend the bank our money & they make money. When they lend us money either via credit card or a fixed rate loan they charge us a high rate of interest. If the bank runs into trouble we lose our money while their execs still reward themselves unthinkably high wages & bonuses. We take that risk for the convenience it offers us. It is a mutually beneficial agreement. The suggestion that we should now pay them to borrow our money is mercenary. However it is not at all surprising as now with the credit rating system just about in full force, to operate without a bank account is nigh on impossible. These execs know that only too well & of course given the extreme lack of moral decency & ethics pervading that world we can only expect them to cash in. Wrong is still wrong no matter what fancy wording one uses to justify it just as right is still right. Right & wrong are absolutes that do not change with the fashion or the whims of those who wield far more power than they are able to control in their lust for self enrichment.
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I find it utterly incredible that this industry is constantly trying to find ways of fleecing people. Charging for credit cards...charging for some accounts...charging horrendously large fees for late payments etc.. It wasn't that long ago that they started charging us for using ATM's. The industry very nearly brought down the financial world, yet are recovering very well and awarding themselves healthy bonuses despite many folk losing everything. These people are shameless. Utterly shameless. And our politicians are pathetic for allowing them to carry on in this fashion.
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Another ripoff. I already feel mugged by the banks. Ridiculous idea.
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25 July 2012