Free Banking-Free Internet Banking??????????

  mbp 14:01 29 May 2004

Yes, it is apparently free. But I would like clarification from someone who is in the know.

I read a public notice at a petrol pump the other day stating that a banking charge has already been included in the bill for using a Credit Card. It is a certain percentage of the total bill,(I forget what the percentage is, but I was honestly surprised, after all these years of thinking what a great free service. Must be in the fine print somewhere!) That is how the banks pay for this service they are providing.

Just think, of all the transactions you use your credit card, if the banks get a percentage of the total UK transactions, what does that amount to? Is it time for some ombudsman to examine if this charge is fair or is it excessive in today's context? Most Credit Card companies are doing very well these days, partly benefiting from for those who pay interest on their unpaid bills, and mainly from this unseen and probably unnoticed service charge at source. What do you think about it?

  TomJerry 14:19 29 May 2004

Bank provide you an service and charge for it. What wrong with that? Nothing in this world come free except air.

The charge is upto 3%, normally the retailers pay for it, so you do not know the differnce between paying by cash/cheque or paying by credit card. From business point of view, they actually perfer credit card even with charge because (1) bank also chage them for handling cash and cheque (2) it takes time and risk to deposit cash, credit card transications are almost instant.

Banking is "free" because the bank charge you in other ways, mainly take your money and pay you very little or no interst but charge a arm or leg to loan money to someone else (e.g. morgatage).

  Stuartli 14:27 29 May 2004

I'm surprised you've posted this thread as banks are not charitable organisations contrary to some hopeful and popular belief - they exist to provide a service and to make a profit. How on earth would they survive otherwise?

The banks are paid a fee every time a debit or credit card is ued, with the retailer or whoever has provided the service paying an agreed fee or percentage of the amount spent.

That's why most retail outlets, for instance, insist on a minimum amount being spent such as £5 or £10 before accepting payment by card to be made, otherwise there would be little or no profit for them on the sale.

In fact certain retailers don't even go that far and some holiday travel companies, for example, levy a surcharge of a fixed percentage (around one to two per cent) of the overall cost to cover their card costs.

I do accept that some credit card companies, who shall remain nameless, do charge their customers i.e. me and you, somewhat over the top interest rates if you don't pay in full after receiving the monthly statement.

But you can't expect banks to lay out many millions of pounds every month paying retailers out for goods sold after they have accepted debit/credit card payment and not get a financial return - it would be economic madness.

  ste_bla 14:28 29 May 2004

In NZ ALL the major banks charge you a 50c fee everytime you use your card (20p) a cheque is $2 (60p) and so on.. you would expect them to pay better interst well your having a laugh even on current acconts its 0.01% and savings is always equal to NZ BANK RATE (Like BankOfEngland) so lot better here.... and before you say it mortage rates are lot higher so you loose out there to even when GOVT Bank rates are comparable...

They have started getting better but UK is V good compared..

Oh and yea there is a 3% handling etc well what do you think the credit card high interst is for (not totally for their pockets)

BTW how does internet banking come into this?

  Stuartli 14:36 29 May 2004

TomJerry has posted whilst I was typing and reminded me of one or two other points.

The one about banks charging retailers and serivce providers for handling cash is correct.

I had the second half of a double-glazing installation on my property completed a few days ago and we actually drew out money to pay it in cash.

In fact the owner of the double-glazing company made a point of asking for a cheque in order to avoid having to pay charges for depositing cash at his bank.

I would disagree with the point about mortgages and loans interest rates - I wish they had been this low when I had a mortgage....:-)

Low inflation is a mixed blessing. It helps people who are borrowing money for whatever purpose, but for those who rely on interest from savings as a full or partial income it can prove a nightmare, especially as it is still taxed by Gordon Brown.

You are taxed whilst earning it and then taxed again after saving it - no wonder people are not bothering to save any more.

  spuds 14:38 29 May 2004

mbp-- I am finding it rather difficult as to what you are getting at. The charge that you mention on the receipt from the services station as no bearing on the actual cost that you pay,there is no interest charge, and the receipt makes that clear. If the pump states that you have obtained £10.00 worth of petrol, that is what you will pay, irrespect if you pay by credit card,debit card or old fashion cash and coinage.

Places like PC World and Curry's have displayed signs around their stores about this procedure for a very long time now.If there are certain administration charges,then the supplier usually deals with this in their normal trading procedures. The only difference to this arrangement is the good old Surcharge, which some retailers [not very many]request that you add to your final bill, as they regard their products profit margin is insufficient to absorb the credit card companies charges.

Again, if you use internet banking you will find no charges unless the bank states overdraft, arrangement fees or similar charges as per the banks terms and conditions.

Sorry that I cannot give you the 'who is in the know' clarrification on this matter, but only my oppinion and knowledge on this subject, as a joe public layperson

  Stuartli 14:43 29 May 2004

Sadly, the thread demonstrates the attitude being adopted more and more these days of wanting something, wanting something now and wanting something at the lowest possible price.

However, in order to satisfy such wants, more and more businesses are going to the wall - there's no way, for instance, your average small TV/audio/appliances outlet can compete with the likes of Asda, Tesco, Sainsburys etc selling goods such as 28in widescreen TVs at well under £200 and DVD players/microwaves and similar below £30-£40.

  mbp 16:22 29 May 2004

I had not intended to imply that Banking Services should be free. Nothing in life is free. I was drawing readers attention to the fact that the service charges are added to your bill in an indirect way. Banking or credit card services did incur a direct cost to your purchase. It is not transparent and apparent! Internet Banking utilizes the Credit Card, and therefore the charge goes along with it. Therefore it is not free in reality.

I had always been aware that banks charged Retailers and Service Providers a charge (that they resented in the early days.) Hence some only accepted certain credit cards that offered them a deal or guarantee of payment.

However, a notice I read at Sainsbury Petrol Service said something like: Warning: We have imposed an 2% (?) Bank Service Charge on your Credit Card Transaction, as required by the Bank. I do not think that this is the charge the Banks impose on the Retailer or Service Provider. It is a seperate charge. Or have retailers found a way to shift the cost on to the customer? So I can only assume that my bill has been jacked up by that percentage amount(2%), but it is not itemised, i.e. it is a hidden charge except for the notice on the Board. When I queried the check out girl she said that this is not new, it has always been there. Perhaps everyone else was aware of this, I only want to confess that I was not. I thought that the retailer bore the charge.

My next question was: is this a fair level of charge today? Most families use Credit cards today. If a family uses the credit card for say £60,000 of purchases per year, their minimum Credit Car service cost is £1,200 p.a., without any interest payments. This would seem rather steep, compared to the older system of stamp duties on cheques, i.e. 5p or 10p per cheque.

If I am wrong please correct me! I am not trying to be controversial, I am trying to know what you think about it.

  oresome 19:42 29 May 2004

The recent inovation of displaying the credit handling charge on the receipt is a ploy by the retailers to reduce their inland revenue and vat liabilities. It's purely an excercise on their part and doesn't affect the actual payment you make for the goods received.

  TomJerry 20:06 29 May 2004

Whether customers pay by cash or credit card, banks will charge handling fees to retailers. So it does not make any difference. This charge will NOT be on any small print on any credit agreements because it has nothing to do with credit card users.

If you spend 60k a year on credit card, get a card with 1% cash back, so get 600 back every year which is more than you pay for broadband.

  Chronos 20:18 29 May 2004

one of the posts above said the only thing free was "air" you can bet your life that b'liar and brown are at this moment trying to find a way of putting tax on it..

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