Reply to: HSBC Business Banking - £5.50 per month!

[d000hg]

I've been looking seriously at ditching HSBC and returning to my old, free, Santander account. However since I pay ~£30 a month on fees for international transfers, £5.50 doesn't seem a big deal.

[amcdonald]

Paying interest is only uncommon in the Islamic world.


Banks don't make their profits from fees. They make it by lending money. Banks WANT you to put money in your account otherwise they can't lend it to someone else.

Even they still really pay interest, they just call it something different so as not to offend anyone

[blacjac]

Yes, you have missed something...

[ankreeti]

Charges on HSBC Business Direct Account

Unless i have missed something, as per following link, if you are a internet/Telephone only user, you do not pay monthly fee.

Business Direct Rates and Charges: Starting a Business: HSBC UK

[AtW]

So you reckon HSBC has 10 million small business accounts in a country of 47 million adults, with at least 5 other competing banks?

Charge should not just apply to business accounts - in many countries any bank account isn't free.

Having said that if I was bank manager I'd waive such small charge for those who keep decent balance in account.

[doodab]

Also considering HSBC has UK profit of around £18bn a year, even your crazy figures prove me right - that would increase profit about 3%. A tiny proportion of their profits - account fees are not where they make money.

According to their annual report in the UK in 2012 they made $343 million from retail banking and $832 million from commercial banking.

Fee income of one kind or another is around 1/3rd of their income in both sectors and comes to a bit over $4 billion a year, so a few hundred million is well worth having.

[d000hg]

So you reckon HSBC has 10 million small business accounts in a country of 47 million adults, with at least 5 other competing banks?

Also considering HSBC has UK profit of around £18bn a year, even your crazy figures prove me right - that would increase profit about 3%. A tiny proportion of their profits - account fees are not where they make money.

[AtW]

That is all well and good but it doesn't make AtW's argument that a bank makes its money through account fees any less laughable. These are just the icing on the cake for the banks...

10 mln accounts paying £5.50 per month is £660 mln annual net profit if before those accounts were "free".

What's real problem is %-tage banks take from credit card payments - totally crazy 2-3%.

[d000hg]

Fee-free banking is hardly universal, in many countries monthly fees are the norm and even in the UK many personal current accounts charge a monthly fee and most "proper" business accounts incur charges for all transactions. So I'd say £5.50 was pretty good value in the grand scheme of things.

That is all well and good but it doesn't make AtW's argument that a bank makes its money through account fees any less laughable. These are just the icing on the cake for the banks...

[doodab]

Banks have been giving accounts away for free for decades and yet they somehow manage to scrape together profits of several £billion each year.

Bank accounts have never been "free", those that didn't charge a monthly fee have historically been subsidised by extortionate charges on those who don't manage their affairs very well. Interesting chart here (http://www.ecb.int/events/pdf/confer...018c3c61f33260) shows that 52% of UK retail banks fee income is made up of exceptions handling as opposed to between 1% and 15% elsewhere. This income stream has been severely curtailed due to regulation. Also worth noting that income due to "cash utilization" i.e. making money out of the money in your account, is lower in the UK than any other country in Europe. This is basically because most British people & small businesses are skint, run on credit, and generally don't have a big pot of cash in the bank.

Fee-free banking is hardly universal, in many countries monthly fees are the norm and even in the UK many personal current accounts charge a monthly fee and most "proper" business accounts incur charges for all transactions. So I'd say £5.50 was pretty good value in the grand scheme of things.

[lilelvis2000]

Paying interest is only uncommon in the Islamic world.


Banks don't make their profits from fees. They make it by lending money. Banks WANT you to put money in your account otherwise they can't lend it to someone else.

Cant they just make up some derivatives, get some 'cash', then lend it out?

[saptastic]

So what are the options, is Cater Allen good, any principal differences between CA and HSBC banking if someone had experience with both ?

Looks like they even have decent saving account rates, e.g. 1% for 9 months term (50K+), rather than 0.0000001% that HSBC tend to offer.

Have used both. Switched from HSBC to Cater Allen via Contractor UK.
CA is fine and good telephone customer service. Plus no transaction charges through CUK.
Tried to pay a cheque at Santander but needed to be RBS apparently. But I just got some pre paid envelopes now.

Also got annoyed that HSBC try to promote virus software when you login.
You press remind me in 14 days and yet Every day it pops up again. Little things....

[AtW]

Paying interest is only uncommon in the Islamic world.

Banks in UK paid interest like most around the world, it's only recently they stopped because BoE prints money, why should they pay anything when they can get money free from BoE?

The issue is with BoE here, not banks who act rationally.

Banks don't make their profits from fees. They make it by lending money. Banks WANT you to put money in your account otherwise they can't lend it to someone else.

Right now banks can get free money from BoE.

[d000hg]

It's uncommon practice around the world.

Paying interest is only uncommon in the Islamic world.


Banks don't make their profits from fees. They make it by lending money. Banks WANT you to put money in your account otherwise they can't lend it to someone else.

[AtW]

Banks have been giving accounts away for free for decades and yet they somehow manage to scrape together profits of several £billion each year.

It's uncommon practice around the world. Just like giving our "free" mobile phones - the reason it "works" is because customers are ripped off to make up for the "free" service: crazy fees for unauthorised overdrafts, missold pensions, insurance, tulipy "AAA" rated bonds. Should the banks earn money like this? I say - NO, they should charge for the services provided.

In our service we don't catch free customers with hidden fees - what we provide for free is actually free, compare it with:
1) "free" phone but you pay monthly fee
2) "free" bank account but you pay for transactions and get ripped off in many other ways