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Comment by chrisseaton | Hacker News Reader

> I find it a bit disgusting actually

But withdrawing and depositing money is a service that costs the banks money to do doesn't it? I'm can see why you don't like but I can't see it as morally 'disgusting'.

Would you look after someone else's meagre current account for them, and give it back on demand, for free? I wouldn't.

I don't really know who covers that cost in the UK. It's certainly not interest they earn lending out our savings is it? Especially this type of customer since they have no savings because the point of the card is to encourage them to do so, and since interest rates are so low.

Who is paying to cover the costs of a basic bank account of someone who doesn't save? I've no idea.

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> But withdrawing and depositing money is a service that costs the banks money to do doesn't it?

It's literally their job. It's their function. Why am I reimbursing them? I'm giving them my money essentially to invest, why am I also paying them to support basic business functions on my money, with my money, while they make money using my money?

It's easy to say "hurr durr why are you paying them for a service they provide, who does that??" but that's missing the point. Banks are a special case.

> I can't see it as morally 'disgusting'.

It disproportionately affects the poor, and for no real reason than 'I can charge this so I will'. Apparently some places charge you to even check your balance? What the hell.

> I don't really know who covers that cost in the UK

The big, fat, rich banks do. Because the total cost of running all their ATM's is a fraction of a rounding error on their yearly turnover.

> I'm giving them my money essentially to invest

But what about those people who aren't giving the bank any meaningful capital to invest? What is the bank getting in return in that case?

Or are you arguing that banks should be forced to provide it as a kind of social service even if they don't earn anything? I can understand that kind of point of view.

The answer to "not enough people are giving banks capital to invest" is not "charge people more", it's to work out why nobody is putting their money in banks. Could the charges be a factor? Or a paycheck-to-paycheck economy?

The people not giving the bank any meaningful capital are going to cost them much/anything,because it's not as if Joe Bloggs with $500 in his account is going to be doing a thousand withdrawals and balance checks a month.

The point is the banking fees hit those who can least afford to pay them the most. It doesn't have to be like that, and I can understand a kind of point of view that supports it.

  Or are you arguing that banks should be forced to provide it as a kind of social service even if they don't earn anything?

Since banks, especially systemic critical, large banks make a shit ton of money based on an implicit guarantee by the tax payer, yes, I'd argue exactly that.

When banking becomes optional, I agree, however I need a bank and I ain't paying to take money out of it. When banking is optional, by all means they may charge, but I will take my cash in £20 pound notes in Royal Mail Special Delivery at the end of the month cheers!

I can't understand this point of view. Food isn't optional, and you still have to pay for that. Why should banking be free?

You don't order food from a restaurant and have the restaurant take/withhold a portion of your meal off you to cover the cost for bringing it from the kitchen to your table.

But they do charge you more than what it costs to make the food. I know what a USDA Choice ribeye costs and it sure isn't what the steakhouse down the street charges me. You could also say that your restaurant bill is covering all the food they have to throw away at the end of the night. Not to mention tip, there's another 20% add on.

billing systems always expand to be as maximally complicated as the system will survive. Consider telephone billing toward the end of the last century, until the cost of billing exceeded the revenue from exotic billing systems, there were all kinds of insane schemes about internal, intra-LATA, inter-LATA, in-State, nationwide-LD, international, it was a complete circus. Eventually the cost of administrating that exceeded every other cost of providing service and now we just get "minutes" or even unlimited (provided with a weirdly billed data plan of course)

For another laugh buy a house or car with a loan and there's zillions of little fees and commissions tacked on to the base price. Complexity only increases over time, and it only decreases with collapse.

This is part of the logic of the old great depression "liquidate liquidate liquidate" guy who sounds heartless in retrospect but in practice the only way to reallocate poorly allocated resources in the modern capitalist system is to flush and start over, so not knowing the GD was going to be as bad as it turned out, the guy was correct, the faster the obsolete stuff gets flushed, the faster we get back to real living. Which is analogous to current conditions, and why many people are unhappy nothing has been fixed in the banking system (or another example is health care, obamacare and trumpcare have in common that they fix none of the core problems, which is our health care allocation system is an expensive disaster)

In many countries, this limited bank runs out of the post office. TBH, that isn't a terrible idea for the US. It would shore up the USPS, which primarily makes money by delivering junk mail, and it provides lower cost banking for those who would wind up paying check cashing fees.

So, where I live there's at least 5 different banks that offer free accounts, domestic transfers are free, and I think about three of them offer free withdrawals from any ATM in the country. Withdrawing from a foreign ATM in Europe is like 0.3 EUR. Oh and they give you a card for free, of course.

And it's not like they are about to go out of business either.

At the scale larger banks are operating at, you could argue that even customers storing a few dollars each represent a significant block of capital in aggregate.

It's also clear that banks aren't losing money. What's at issue is how they earn their money and at whose expense.

Historically, retail banks made their money off of the spread between their loan interest rate and the rate they pay out on deposits. So they borrow from your deposits at 2% and loan it out at 5%, pocketing the 3% difference. Over the past 20 or 30 years, extremely low interest rates and competition with money market funds and other more complex savings vehicles have reduced depository interest to essentially nothing, which sets a ceiling for the spread. So for a bank to make money off a regular joe who doesn't have enough money to access investment banking services, they need to charge fees to make a profit. For example, if you have an average $1000 in your account, the bank may only make $10 off of that in a year. Many lower end clients, the ones who tend to pay high fees for overdrafts, have even less money than that deposited on average. Also it's worth pointing out that most banks charge withdrawal fees only if you use another bank's ATM. It's entirely possible to have a checking or savings account at a bank and never pay significant fees if you don't overdraft or drop below minimum amounts. Of course, those issues tend to affect poorer customers disproportionately, but it's not without reason even if it is problematic socially.

> So they borrow from your deposits at 2% and loan it out at 5%, pocketing the 3% difference. Over the past 20 or 30 years, extremely low interest rates and competition with money market funds and other more complex savings vehicles have reduced depository interest to essentially nothing, which sets a ceiling for the spread.

It sets a floor for the spread, not a ceiling. All else being equal, the bank should make more money when the amount of interest it has to pay its customers drops.

Those are the costs associated with running a bank. It's paid for by giving them access to our capital, that they can use to invest.

Have we forgotten what a bank is for? It's to conveniently and safely store money. Part of that convenience is to withdraw and store money at many locations. If a bank didn't offer that they wouldn't get my money.

> It's paid for by giving them access to our capital, that they can use to invest.

What capital? The people referred to in this article don't have any savings. Many working class people have no savings at all, and only a few thousand in their current accounts.

Which does not make this offer reasonable, it is still ripoff. They are better off keeping money in box at home.

Criticising this offer is as valid as criticising any other expensive and bad service.

A person being a customer of a bank means the bank has first access to that persons business when they need mortgages, other loans, home insurance, buying funds for retirement savings etc.

I suppse where bank accounts are free including services like ATM that might be an indication that banks compete for all customers - which might ni turn be an indication that all customers are reasonably likely to buy financial products such as taking loans or savings products in the future.

"Free checking" is a relatively new practice in banking that really only caught fire after ATMs were invented. Banks would charge fees on transactions--like most financial services do.

Even now, most free checking accounts only require a certain amount of money, transactions they collect fees on, etc.

With interest rates so low, they don't make much just holding onto 500 dollars for someone.

Savings accounts had less fees, but you couldn't use them to write checks out of, etc.

Do believe that banks are setting their fees based on their associated costs?

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