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First Direct to end Free Banking for some by charging 10 pounds per month, which can easily be avoided

ConsumerWatch / Strategic News Nov 15, 2006 - 02:49 PM GMT

By: Phillipa_Green

ConsumerWatch

First Direct (HSBC's online banking arm) is to charge Current Account customers a fee of £10 per month if they do not deposit £1,500 per month or maintain an average balance of £1,500. Other banks could follow suit to recoup money lost as regulators clamped down on fees in other areas.

The £10 fee will be charged from the 1 February 2007, if the only product held with First Direct is a Bank Account or Cheque Account and if paying in less than £1,500 per month or maintaining an average monthly balance of £1,500 or less. The banking fee will be charged monthly in arrears, so the first charges will be debiting accounts during the month of March 2007.

How to Avoid paying the £10 monthly fee


All is not lost for First Direct customers, as there are ways to avoid paying the monthly fee, even if you do not maintain a balance of £1500 on your current account.by taking out another First Direct product.
  • Home or Car insurance
  • Flexi loan
  • Credit Card - Do not need to use it
  • Savings or esavings Account - Can open with just £1, and is probably the best way to avoid the charge,
  • First directory
  • Mortgage

First Direct's move is seen as an attempt to cross sell more products and identify customers who rarely use the account. The online bank said it had 40,000 dormant accounts and over 250,000 accounts that have fewer than 10 transactions a month Other banks already have minimum funding requirements such as the Alliance & Leicester which requires a transfer of £500 a month for its Premium Direct current account, while Lloyds TSB's Classic Plus and Nationwide's FlexAccount both require £1,000.

The Midland bank was the first UK bank to introduce free banking in 1984 (later taken over by the HSBC), and Britain remains one of only a handful of countries that do not charge customers on their current accounts, who remain in credit.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments


15 Nov 06, 16:08
First direct hitting the poor
There was a lot of fuss recently about basic bank accounts and trying to get the poor people financial services so they don't go to loan sharks ?

Is this not aimed at the poor ? I.e. people who earn too little ? I heard that for £1500 a month you need to earn £24k !!!

Thats alot where I live and the news sites estimate half the people in the UK don't earn that much !

15 Nov 06, 19:28
Re: First Direct to end Free Banking for some by charging 10 pounds per month, which
If we all open and do not plan to use, savings accounts and credit card accounts, won't this create more dormant accounts, which contradicts the original intentions of the company? Unless the "dormant" explanation was just an excuse for opportunism at the cost of low income earners.

As a matter of principle I will leave First Direct, and urge other customers to do the same.

16 Nov 06, 05:49
Re: First Direct to end Free Banking for some by charging 10 pounds per month, which
I am a First Direct customer. I believe I qualify to avoid this charge as I have a savings account with them. I am seriously considering walking regardless as I'm disgusted by this new charge and I think we need to send the message that this is not acceptable. I understand that banks have to make money. I'm also aware of the fact that countless people are reclaiming historical charges, but I think the banks shot themselves in the foot there as they are now. How about they stop paying out £50 to new customers and reduce their savings interest rate slightly to compensate, rather than make this charge?

It'll be bye bye NHS next!

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