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Tizer
VIP Member


5150 Posts
Posted -  25/06/2010  :  09:59
I just love banks, don't you? They go out of their way to make life exciting and to make sure we are always wondering if our account will have been emptied by tomorrow morning. They spend a fortune launching `Chip & Pin' and trying to convince us that it is infallible and that any fraud on our card in future will be due to our failings, not theirs. They do us great favours like deciding, unilaterally, to get rid of cheques. They are so good to us I thought we should reward them with a thread devoted to their marvellous escapades. Let me start with this offering but please add your own experiences and comments...

We have received a letter from Santander (Abbey Nat to you and me) beginning "We are deligted to inform you..." which always sets alarm bells ringing, and ends "As Santander we will continue to offer innovative, great value products and are committed to delivering excellent service to our customers" which sets the sirens blaring.  What they are delighted to inform me is that they have upgraded (without consulting me) my Cheque Guarantee Card to a Visa Debit Card. But I don't want a Visa debit card, I don't need another card, it's just another thing to get stolen, lost or defrauded.

But there's a sting in the tail. They then tell me to destroy my cheque guarantee card by cutting it in half. OK, I think, the new card will be used for this instead. But no, lower down in the letter it says the new card cannot be used to guarantee cheques. I know that cheques are set to be phased out (unilaterally once again, by June 2011) but it looks like the banks have devised a great scam to deprive us of cheque guarantee cards so they can say that cheques are not much use. I use cheques a lot and I would prefer that they were not phased out, but then, hey, the banks are not there just for you and me, are they?

I notice that although the letter tells me to destroy the cheque card, nowhere does it say that I cannot continue to use it. So I'm going to use it for as long as possible. I advise everyone to do the same. The banks are just hoping we will all fall in line with their demands and destroy the cards immediately.


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Tizer
VIP Member


5150 Posts
Posted - 29/12/2011 : 15:55
How about 160,000%? Paul Lewis explained in the January 2011 issue of Saga magazine...

"Some of Britain’s biggest banks are getting rid of complex and unfair bank charges and replacing them with simple fees. However, these new charges, although easier to understand, can be far more expensive – especially if you go into the red by just a small amount. The latest bank to make these changes is Lloyds TSB. From 2 December everyone gets a free £10 buffer so if you go overdrawn by a small amount then there will be no charge. However, once that £10 is exceeded all customers will pay a fee of £5 a month for every overdraft which is used even where the bank has agreed to it in advance. And those who take an unauthorised overdraft will also pay a daily fee of £5 for borrowing between £10 and £25 and a daily fee of £10 for amounts above that. The maximum daily fees that can be charged in a month is set at eight. So an unplanned overdraft of £100 which lasts for a month and is then paid off would cost a total of £85. Because these are fees not interest Lloyds TSB does not have to declare the APR. Just as well. The calculator which the Office of Fair Trading used to publish shows the APR in that case would be more than 160,000%. There are some variations on these rules depending on the account you have."

Here is a crafty trick from Santander.The explanation starts about halfway down this page [LINK] from MoneyWeek with "Take the most recent offering from Santander...."


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Whyperion
Regular Member


122 Posts
Posted - 29/12/2011 : 21:06
The reflection of charges shows that interest rates as the time cost of money are now longer ( if they ever were ) a means of rewarding the lender, particulary on low value loans and advances.  Fixed costs of operation are quite high , hence the upfront or end charges.


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Stanley
Local Historian & Old Fart


36804 Posts
Posted - 30/12/2011 : 04:47
The excuse of 'high front end charges' to pay for admin is dishonest. Administration is a cost of running the business and should be recouped via the interest paid on the loan. In this way it becomes a progressive charge, the more you borrow the more interest you pay, this should be the basic principle of credit.

Remember when the banks started charging an account-holder for writing a letter? The surcharges made by some companies for using debit and credit cards come under the same heading. These are Cunning Wheezes to extract more money from the customer which allows the headline price of the service or product to be artificially lowered making the provider more competitive at first glance. It is basically dishonest and permeates many areas of business.

Perhaps what we need is a regulation banning all front end charges and making admin costs recovery part of the overall transaction.


Stanley Challenger Graham




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stanley at barnoldswick.freeserve.co.uk Go to Top of Page
Tizer
VIP Member


5150 Posts
Posted - 30/12/2011 : 10:07
One of the leaders of the Cunning Wheezes brigade is Ryanair with their rock bottom prices hiding all sorts of last minute hidden charges. They have been told by the regulator not to over-charge  for use of credit cards but they claim their charge is an administration fee. But as S says, "Administration is a cost of running the business" and should be included in the advertised price.

Another famnous cunning wheeze was Npower's 10-month year where the customer signed up to a year's special rate then found that Npower had defined a year in its T&Cs as 10 months. Mind you, Npower got nobbled for it. But watch out, making up your own definitions is fast becoming normal business practice. We need a Cunning Wheezes regulator. Perhaps we need one big, very powerful overall regulatory agency to replace all the others?


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Whyperion
Regular Member


122 Posts
Posted - 30/12/2011 : 20:44
Rather depends what you are selling , if it is a service , or a product , then most costs that wont vary with the method of customer procurement or settlement mean should mean one single price.

Interest rates are a bit of a problem as the fixed costs after a while cannot possibly be re-couped from the amount of interest charged if the rate is moderate (3 to 8 percent ) and the loan amount low , say less than 5000 which for one year is £400 , close to the cost of employing one person for a day and the investment in systems/ buildings to provide the loan.  Having said that if you look at many fixed / low mortgage deals the up front costs for anyone in a modest house mean that the interest paid saving is very low , there is a penalty if you want a good deal on only a modest mortgage or re mortgage to get the best deal. 


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Stanley
Local Historian & Old Fart


36804 Posts
Posted - 31/12/2011 : 04:50
So what's wrong with the smaller customer getting a relatively good deal on the backs of the big ones? Far better than hammering the weakest to save the strongest a miniscule amount in their terms. Besides, admin (the actual cost of managing the account) is mimimal in most cases in digital systems.


Stanley Challenger Graham




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stanley at barnoldswick.freeserve.co.uk Go to Top of Page
Whyperion
Regular Member


122 Posts
Posted - 31/12/2011 : 10:18
The use of credit unions for small credit where only a small fee is charged is a way , they are generally funded in their operating costs by charitable trusts, local authorities or similar.  Useful replacement for HP etc. Smaller local building socities offer good deals for long term mortgage homes , which was the general idea of them.

FTSE100 ended year about 5% lower than at the start , with inflation at 5% too if you had investements only you are 10% worse off. (Unless you switched out of bank shares and into mining and energy , they showed a rise in value. 

I think due complaint on the cost of saving - pensions with providers charging 2 to 5% of either funds invested or fund value a year , and also the cost of trading shares - intermediaries charge around 2% of transaction value plus min £25 to £50 per trade which is a lot for only small bundles of shares.


The Views above may or may not be true , I may or may not agree with them. Go to Top of Page
Stanley
Local Historian & Old Fart


36804 Posts
Posted - 01/01/2012 : 05:26
I got something new from my bank. A statement of all the charges I had paid them over the last year. Nil return in my case but I'll bet it's a bit of a shock for some people!


Stanley Challenger Graham




Barlick View
stanley at barnoldswick.freeserve.co.uk Go to Top of Page
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