Free Banking

Don’t want to pay for your bank account? You don’t have to. The banks might want to bring so-called ‘free banking’ to an end. But if you follow the steps in this independently researched and written guide you can avoid any expensive shocks in the future. At the end we’ve even got some of the latest banking best-buys. Remember, it’s your money. Don’t waste it!



Current accounts.

Most of us have got used to fee-free current accounts over the past decade or so. Every bank and building society has offered at least one current account where it doesn’t cost anything to pay money in, write cheques, set up direct debits and standing orders or use cash machines and debit cards. But that’s all changing. In February 2007 First Direct started charging a £10 monthly fee and a range of other charges for customers who don’t have at least £1,500 a month paid into their accounts. Experts said other banks are almost certainly going to follow suit. Whoever we are and however much money we have the banks might want to start charging us for looking after our cash.

Banks to fight customer backlash with running charges

The recent trend of consumers complaining against so-called 'unfair' bank charges could mean the end to free banking for all.

According to financial research company Defaqto, the current backlash against high fees for bounced cheques and breached overdraft limits may prompt banks to introduce charges for merely holding a standard account.

It is estimated that over a million UK customers have downloaded bank charge complaint forms from the web since November 2006 and the Financial Ombudsman Service receives over 1,000 queries per day.

Banks contend that the ending of free banking is justified by the fact that customers who go overdrawn are currently paying for those who do not but, while the banks themselves face the same costs in managing accounts for both customers.

For the past three years, customers have not had to pay to hold a current account but Defaqto believes that we could see charges introduced in as little as two years.

David Black, head of banking at Defaqto, said: "The first major provider to introduce charges for all customers is going to take a lot of flak but it is likely that the majority of the main providers will then follow the lead."

Neil Simpson is a former Personal Finance Journalist of the Year and writes regularly on property, mortgage and insurance issues for the Mail on Sunday, City AM newspaper and many other publications.

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