Will banks start charging for current accounts?
January 23, 2008
Most banks in the UK offer a choice of bank accounts to suit different needs, and this includes basic bank accounts, current accounts, and premier accounts. The most popular of these is the current account, which is the type of account that the majority of people use to deal with their day to day financial transactions. Current accounts offer a range of facilities and services for banking customers, enabling them to smoothly manage their finances, and to both receive and pay out money.
In order to have a current account you will usually need to have a fairly decent credit history, otherwise you may find that you will only be offered a basic bank account. A current account is used by most people to have their salaries paid in, and to arrange of payments to come out as well as provide a facility for withdrawing cash.
With a current account you can set up direct debits and standing orders, make one off payments by phone or online with banks that offer online banking, make debit card payments, withdraw cash, and more. Some current accounts come with an overdraft facility depending on your credit status, and these accounts also come with a cheque book and debit card facility. These, state bank officials, are all services that are provided to the customer.
About fees
If you exceed any overdraft limit on your current account you may be charged a hefty fee by the bank, although these fees are currently the subject of a High Court test case and may be abolished depending on the outcome of the case. Some current accounts already charge a monthly fee to certain customers, such as First Direct, which applies a £10 monthly charge to the account of anyone that does not have a certain amount of money going into the account each month and has no other First Direct products.
However, the monthly account fee could soon become the standard in banks across the UK depending on the outcome of the High Court test case. Many officials think that if the Office of Fair Trading wins the case, and banks are forced to abolish charges for overdrafts, bounced cheques, and returned direct debits – or even if they are forced to drastically reduce the charges – many will try and recoup the financial losses by charging all accountholders a monthly fee. Bank have stated that the charges they apply cover the cost of the services provided, and this is likely to be their argument if they decide to introduce monthly fees.
Officials from the British Banker’s Association have argued that the fees currently charged are fair, and therefore if this argument wins over the judge in the test case then it is likely that the charges will remain and monthly fees will not have to come into place.
One BBA official recently said: “We have always believed that what we are doing is correct and legal. We are confident and think the hearing is an important opportunity to bring some clarity to the legal position.”
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