Scow Posted 4 August 2006 Posted 4 August 2006 Rumour has it that First Direct are planning to introduce a £10 monthly fee for their current account. On the face of it, some people may be surprised by this, but it was only a matter of time before personal accounts started charging a fee for utilising their services. Also, with the banks forced to cut charges on late payments from credit cards holders (Typically from around £20-30 to just £12 now) and other things such as exceeding overdraft limits, items being returned and late loan repayments, they are now looking at other ways to generate revenue. I'm sure there won't be too many people happy about this, especially First Direct customers, however, it is inevitable that all banks will follow suit. It's a case of who dares to go first, and it seems First Direct will take the plunge. HSBC would have been behind this as they own First Direct, so they would be next I'd imagine to introduce such a fee. Details are a little hazy about the £10 fee - some are suggesting the more products/services you have with them, charges will be reduced or waived accordingly. Anyhow, it's not encouraging, but not surprising at the same time. As I say, it's a rumour - Original source Money Saving Expert Forum Any views on this?
Nationwider Posted 4 August 2006 Posted 4 August 2006 Any views on this? Yes. They are arseholes. I will tell HSBC to bugger off asap if they start with this nonsense.
Monk Posted 4 August 2006 Posted 4 August 2006 THe whole point of first direct from HSBCs perspective is that they are different - so what eould be the point in having the same strategy for both? To be honest, working in Banking, I dont think the whole industry would follow a minnow as First Direct. Plus all the banks have their own competitive advantages and have charges for premium accounts anyway.
Scow Posted 4 August 2006 Author Posted 4 August 2006 THe whole point of first direct from HSBCs perspective is that they are different - so what eould be the point in having the same strategy for both? It could be that HSBC are using First Direct as a guinea pig. First Direct are known to be one of the best banks in the UK for service and reputation, so it may be used to guage how customers will react to it. With the Office of Fair Trading forcing banks to reduce charges in general as mentioned in my original post, it shouldn't really be a surprise. To soften the blow, banks will potentially lower interest rates on lending/credit facilities, with Savings subsequently offering better rates.
Monk Posted 4 August 2006 Posted 4 August 2006 It could be that HSBC are using First Direct as a guinea pig. First Direct are known to be one of the best banks in the UK for service and reputation, so it may be used to guage how customers will react to it. With the Office of Fair Trading forcing banks to reduce charges in general as mentioned in my original post, it shouldn't really be a surprise. To soften the blow, banks will potentially lower interest rates on lending/credit facilities, with Savings subsequently offering better rates. I see your point, but TBH HSBC have the marketing power to not need to use HSBC as a guinea pig. FD contribut a reasonable amount to the groups UK profits so why would they risk that with such a risky strategy? I also read moneysavingexpert.com - its a decent site. The original post (credit to MSE) Just moved my account to First Direct a couple of months ago, upon recommendation from a friend who works in the call centre there and she apologised to me today and told me that they are going to charge all their customers £10 a month from next year unless you have lots and lots of products with them so guess I have to know look elsewhere for a bank account but at least I got £50 from them when I opened the account Now in my personal view FD would not do this unless they had some other kind of marketing strategy. For example the Fee may include travel insurance, or if they are bundling products, maybe they will offer a particularly competitive Credit Card for exisiting customers. The retail banking market is extremely contestable, and I do not believe a malicious move such as what you are suggesting could possible come off successfully unless there were some other benefits to it. In addition - internet banks such as FD have reduced the 'costs/effort' it takes to change banks. If this £10 charge does take place, it will have something to do with customer loyalty you can be sure of that. The Banks are not stupid. Also as the big 4 have issued profit statements this week all detailing increasing provisions for bad loans I'd be more inclined to think that the banks will be focusing on gaining and retaining 'quality' consumers and being more conservative on their lending strategies.
Daggers Posted 4 August 2006 Posted 4 August 2006 Also as the big 4 have issued profit statements this week all detailing increasing provisions for bad loans I'd be more inclined to think that the banks will be focusing on gaining and retaining 'quality' consumers and being more conservative on their lending strategies. All banks earn their money from encouraging people into debt. Their definition of 'quality' is someone with a large amount of debt that makes minimum payments every months and pays large quantities of interest. My definition of the term 'conservative' is 'evil' ~ so you are right, banks will become more conservative over time.
Monk Posted 4 August 2006 Posted 4 August 2006 All banks earn their money from encouraging people into debt. Their definition of 'quality' is someone with a large amount of debt that makes minimum payments every months and pays large quantities of interest. My definition of the term 'conservative' is 'evil' ~ so you are right, banks will become more conservative over time. Exactly. So from FD's perspective if they only give their great lending rate (for example) to the fee payers then they are eliminating customers who are likely to default. But you have to bear in mind that the price of lending is made up of the genuine price + a provision for the people who will not pay it back. Hence if they eliminate these people they can justify offering a lower rate, and hence will reduce bad debts and make more profit.
cisono Posted 5 August 2006 Posted 5 August 2006 I have been with FD since 1993. Some time ago, they introduced charges for sending you an SMS when your account goes below a certain threshold (which you set, personally I just wanted to know if my current account fell below £0). I complained to them about this repeatedly (i.e. at least 10 times) but they did not seem to care at all. They kept saying "upgrade to ... (whatever) by paying a certain amount... and you get free SMS alerts. The stupid thing is they give you free weekly statements by SMS (something I don't care about) but they won't give me my "emergency" SMS alert. EXTREMELY annoying. Of course, you could just leave all your money in your FD current account but... they give you basically NO INTEREST on the money in your current account, so you are FORCED to put your money in one of the savings account (luckily it's easy to move money from one to the other). Hence, whatever you do, you lose. I am sooo fed up. Smile seems a good option though: - ethical investing guaranteed - decent interest even on the current account - good deals for students (the website pages where you sign up are not the best I've ever seen though!) PS: I have no ties with smile, other than my brother got an account with them and I myself will be moving to them if FD introduce any charges!!!
cisono Posted 5 August 2006 Posted 5 August 2006 Then I want paying in cash in future. I know many people in Italy who do not own a bank account at all (although they may have a postal account). This is because charges are so high (they get charged even for making deposits!!!) that it stings too much to have a bank account even when you are in full-time employment. When I closed my *student* bank account in Italy, they charged me £15!!!
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