The end of free banking? What could the future hold?
Published 1 June 2012 by Daniel Culpan
Although the majority of people in the UK don't pay for their current account as long as they're in credit, it seems things could be changing, as increasing numbers of banking customers look at the benefits a paid account could offer.
As things stand in the UK, the majority of people don't pay for their current account - as long as they're in credit - in contrast to many other countries, where customers are charged to bank via a monthly fee or for each transaction they make.
However, as the Express reports, it seems the days of free banking could be numbered. Barclays, for example, has just launched a range of 'packs' that can come with a monthly fee and provide extras, such as breakdown cover and travel insurance.
But what would an end to 'free' banking mean - and could it actually improve the banking services people receive? It's reported that around 20% of people in the UK already pay for their bank accounts. While some packaged accounts are criticised for not offering value for money, paying for your bank account could be worth it - if it comes with the benefits you really need.
For one thing, bank accounts with transparent fees could put an end to 'hidden' fees and charges. Andrew Bailey, an executive director at the Bank of England and the financial services industry's soon-to-be chief regulator, recently described free banking as a 'myth'.
Mr Bailey claimed that although many banking customers may think their account is free, the actual costs - including charges for unauthorised overdrafts and low interest rates - are basically hidden.
A spokesperson for thinkmoney commented: "When it comes to finding the right bank account for you, it's important to think about what services you're looking for. The thinkmoney Managed Current Account, for example, comes with a built-in budgeting service to help customers meet their monthly bills and no unexpected fees - just a set-up fee of £25 and a monthly fee of £14.50 [for a single account]."
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