Is This The End of Free Banking?
In the UK current accounts with banks and building societies have traditionally been available free of charge. This differs from other European countries where customers are used to paying for this type of service.
However, at the end of last year First Direct announced that some current account customers would be charged a monthly fee. Now the new Chief Executive of the Nationwide Building Society has suggested that a monthly fee for current account customers would be appropriate and reflect the real cost of running branches, cash point machines and so on.
At the moment penalty charges incurred by those who exceed overdraft and credit card limits represent a significant source of income for banks and building societies. These customers therefore pay a greater proportion of running costs. Credit card providers have already been told to reduce penalties and the Office of Fair Trading is now investigating penalty charges in general. According to some campaigners excessive penalty charges are illegal under consumer law, and some customers have successfully reclaimed their money.
However, although the incoming Chief Executive would prefer costs to be shared by all customers, the Nationwide will not change its fee structure unless the industry as a whole moves to adopt a new approach. Barclays Bank has said it is still committed to free banking.
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