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Wednesday, 8 August 2007
Monthly bank charges 'not wanted'
Bank customers do not want monthly account fees even if meant the end of penalty charges, a survey suggests.
The High Court is due to decide in a test case whether the level of penalty charges made by banks is lawful.
If it rules against them, they may try to recoup money with monthly fees or by charging for each transaction.
A YouGov survey of 2,116 people for website moneysupermarket.com suggested just 8% wanted a regular fee with 1% wanting a charge for each transaction.
At the moment, people can be charged as much as £35 for going overdrawn without authorisation or for having a direct debit refused.
The Office of Fair Trading (OFT) is investigating the current penalty charges system.
Pay-per-transaction system
Some experts suggest that the money from these charges essentially subsidised the accounts of people who did not incur them.
Kevin Mountford, head of current accounts at moneysupermarket.com, said free banking was possible "largely because of the number of people who are hit with fees and charges".
If this was outlawed, a pay-per-transaction system - as used in many other countries - could become a reality for the UK.
"We could well see the system prevalent in Western Europe, North America and Australia, where there are a certain number of free transactions and then you pay for any additional ones," he said.
"We have already seen some providers abandon the concept of free banking by steadily introducing a bevy of charges on their less profitable customers."
The introduction of such transaction charges could lead to a change in the spending habits of people used to making cash withdrawals or multiple card transactions, he added.
These people were likely to make efforts to reduce costs, he added.
Wednesday, 8 August 2007
Monthly bank charges 'not wanted'
Bank customers do not want monthly account fees even if meant the end of penalty charges, a survey suggests.
The High Court is due to decide in a test case whether the level of penalty charges made by banks is lawful.
If it rules against them, they may try to recoup money with monthly fees or by charging for each transaction.
A YouGov survey of 2,116 people for website moneysupermarket.com suggested just 8% wanted a regular fee with 1% wanting a charge for each transaction.
At the moment, people can be charged as much as £35 for going overdrawn without authorisation or for having a direct debit refused.
The Office of Fair Trading (OFT) is investigating the current penalty charges system.
Pay-per-transaction system
Some experts suggest that the money from these charges essentially subsidised the accounts of people who did not incur them.
Kevin Mountford, head of current accounts at moneysupermarket.com, said free banking was possible "largely because of the number of people who are hit with fees and charges".
If this was outlawed, a pay-per-transaction system - as used in many other countries - could become a reality for the UK.
"We could well see the system prevalent in Western Europe, North America and Australia, where there are a certain number of free transactions and then you pay for any additional ones," he said.
"We have already seen some providers abandon the concept of free banking by steadily introducing a bevy of charges on their less profitable customers."
The introduction of such transaction charges could lead to a change in the spending habits of people used to making cash withdrawals or multiple card transactions, he added.
These people were likely to make efforts to reduce costs, he added.
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