While Free Banking had appeared to be part of the UK banking vulture until a couple of years ago, there are signs that the days of Free banking may now be numbered. As we covered earlier in this blog, there have been some serious hints from the major financials who are looking to add new income streams to their businesses in the future. The Office of Fair Trading investigation into bank charges has been the catalysts for change, and it looks as though the consumer may well be the one to lose out.
A recent investigation by the Guardian using the same basis as fee accounts available at the moment, has calculated an average fee of around £300 per year for each and every person with a bank account. The fee estimate consists of charges for withdrawing funds, credit card transaction and general monthly charges. While £300 is the figure mentioned for the average user, some of the more active bank accounts could draw charges approaching £500 a year!
Apart from the fact that the current conception of free banking is incorrect (the banks use your deposits to create loans for customers, thereby making a return off your money), we have seen a major reduction in the number of bank branches in the UK over the last few years. It seems that we are being asked to pay more, for less of a service, something which is very hard for many to take. Internet and telephone banking are the preferred mediums for the financial institutions, where costs are less and turnover of calls is much quicker, indeed HSBC recently opened a bank which differentiated between those paying a fee and those still using “free” banking services.
Personal contact with your bank manager is now a thing of the past, in favour of online and telephone services.