# How do banks (in the UK) make money from current accounts? **URL:** \ **Category:** Factual Questions\ **Created:** [October 13, 2019, 11:05am UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712 "2019-10-13T11:05:03Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Bear\_Nenno](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bear_nenno/32/3358_2.png) [@Bear\_Nenno](https://boards.straightdope.com/u/Bear_Nenno)\ **Post date:** [October 13, 2019, 4:54pm UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/21 "2019-10-13T16:54:11Z")
> [@madsircool](#): > > Wouldnt British renters need to write check(que)s to pay their rent? Why would they? I’m sure they could more easily do it through wire transfer. EFTs in Europe are either free, or they’re like a dollar. Nothing near the $20+ they cost in the states. I pay my rent here in Germany that way. > [@Calavera](#): > > I know in the US banks generally charge for having a current account, Where’d you get that idea? Even the banks that _do_ charge a nominal fee for an account usually have very minimal criteria for waiving it, such as “at least one $250 deposit per month”, or “at least $1,000 balance” or something like that. Those fees are there just to ensure the customer is using the account. I don’t know of anyone who actually _pays_ to maintain a bank account. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [October 13, 2019, 5:12pm UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/22 "2019-10-13T17:12:30Z")
> [@Bear\_Nenno](#): > > Why would they? I’m sure they could more easily do it through wire transfer. EFTs in Europe are either free, or they’re like a dollar. Nothing near the $20+ they cost in the states. I pay my rent here in Germany that way. ACH is usually free. ---
**Author:** ![Tim\_T-Bonham.net](https://avatars.discourse-cdn.com/v4/letter/t/46a35a/32.png) [@Tim\_T-Bonham.net](https://boards.straightdope.com/u/Tim_T-Bonham.net)\ **Post date:** [October 13, 2019, 9:47pm UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/23 "2019-10-13T21:47:24Z")
> [@friedo](#): > > What is a current account? A current account is the record kept of the electricity my rooftop solar panels have sent back into the electrical grid. Once a year, the electric company sends me a check for the amount of current I have generated that year. But that is entirely between me and the electric company – nothing to do with a bank. Though I do deposit that check into my bank account. Is that where Calavera thinks the bank is involved? ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [October 13, 2019, 10:14pm UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/24 "2019-10-13T22:14:06Z")
> [@Bear\_Nenno](#): > > Where’d you get that idea? Even the banks that _do_ charge a nominal fee for an account usually have very minimal criteria for waiving it, such as “at least one $250 deposit per month”, or “at least $1,000 balance” or something like that. Those fees are there just to ensure the customer is using the account. I don’t know of anyone who actually _pays_ to maintain a bank account. That depends on where you live and which bank. For example, there are some banks where only a direct deposit qualifies toward waiving account fees, and some that require a minimum daily balance of $1500 in a checking account (which means it can’t dip below $1500 for even one day) or a $5000 total balance across linked accounts. Plenty of people can’t meet those criteria - not every employer will pay via direct deposit and not everyone can keep a $1500 cushion in their savings account. I can’t think of anyone who pays to maintain an account- but my son ended up opening an account at a somewhat inconvenient bank\* when he started working because the larger banks with more widespread branches etc, would have charged him a fee. - It’s relatively convenient to his apartment and my house - but for the most part, if he leaves the NYC area, he will have to use another bank’s ATM and pay fees to both banks. ---
**Author:** ![bob\_2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bob_2/32/3341_2.png) [@bob\_2](https://boards.straightdope.com/u/bob_2)\ **Post date:** [October 13, 2019, 11:03pm UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/25 "2019-10-13T23:03:48Z")
Banks make money from customers who fail to keep track of their accounts. Go £1 into the red on many current accounts and you incur penalty charges. Go beyond your agreed overdraft limit and the charges become swinging. My bank makes the following charge for an arranged overdraft: > [@](#): > > Daily fee: 1p for every full £6 you borrow each day up to > £1250, a further 1p for every additional full £7 you borrow > each day between £1250 and £2500, and then a further 1p > for every additional full £8 you borrow each day over £2500 Apart from this, there are charges for foreign transactions, cancelled cheques etc. These accounts are only free if you stay in the black and never draw money abroad. ---
**Author:** ![Chronos](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chronos/32/134_2.png) [@Chronos](https://boards.straightdope.com/u/Chronos)\ **Post date:** [October 13, 2019, 11:39pm UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/26 "2019-10-13T23:39:19Z")
At the bank I’m at now, there’s no charge for a checking account as long as your total deposits at the bank (including in a savings account) are more than some minimum (a thousand dollars, I think?), nor do you earn interest on the checking (but with interest rates where they were, savings accounts practically don’t offer any, either). But I’ve also seen US banks that charge a fee for checking no matter what, and others that offer interest on checking. There’s no one universal practice. ---
**Author:** ![DPRK](https://avatars.discourse-cdn.com/v4/letter/d/4491bb/32.png) [@DPRK](https://boards.straightdope.com/u/DPRK)\ **Post date:** [October 14, 2019, 2:01am UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/27 "2019-10-14T02:01:02Z")
In the US (and elsewhere) there are also not-for-profit credit unions, which offer financial services including checking accounts, and are presumably less likely to screw their members in terms of any kinds of fees for normal services or have minimum deposit requirements (except for the $5 or $10 deposit one needs to join). They have around 50% penetration, compared to only a few percent in Great Britain (but more like 75% in Ireland!) ---
**Author:** ![Mighty\_Mouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mighty_mouse/32/7776_2.png) [@Mighty\_Mouse](https://boards.straightdope.com/u/Mighty_Mouse)\ **Post date:** [October 14, 2019, 2:07am UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/28 "2019-10-14T02:07:42Z")
> [@madsircool](#): > > Wouldnt British renters need to write check(que)s to pay their rent? We have a British expat colleague. He’s around 27, and just having been posted in the US, we had to show him how to write a check (for a utility connection). This is a guy with a degree from a very reputable university (top 5 in the UK probably) and four years working in a top tier firm. Not only had he never written a check, he’d never seen one written (or possibly was too young to remember). ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [October 14, 2019, 2:28am UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/29 "2019-10-14T02:28:08Z")
> [@Mighty\_Mouse](#): > > We have a British expat colleague. He’s around 27, and just having been posted in the US, we had to show him how to write a check (for a utility connection). This is a guy with a degree from a very reputable university (top 5 in the UK probably) and four years working in a top tier firm. Not only had he never written a check, he’d never seen one written (or possibly was too young to remember). I bet he didn’t know how to send a telegram or start a car with a hand crank either. Some aspects of the U.S. banking system just seem to be stuck in the 1980s, probably behind most Third World countries. ---
**Author:** ![Corry\_El](https://avatars.discourse-cdn.com/v4/letter/c/ecae2f/32.png) [@Corry\_El](https://boards.straightdope.com/u/Corry_El)\ **Post date:** [October 14, 2019, 2:48am UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/30 "2019-10-14T02:48:40Z")
> [@Calavera](#): > > I know in the US banks generally charge for having a current account, and also charge for a lot of the services we generally get for free. In the UK the banks are competing with each other to a ridiculous degree, offering massive “switching bonuses” of up to £200 just to switch your account. Yeah as mentioned ‘current account’ means ‘checking account’ in 'Murrican. Not sure the fee income of US banks on checking accounts is all that different actually. Anyway there’s no reason to think financial institutions have to make money on each product they offer. US banks also offer signing bonuses, and the deal I got with my sign up bonus also means no minimum balance or monthly fee on my ‘current account’ (I sometimes drive to the bank btw in my ‘luxury saloon’, you Brits crack me up sometimes, I love that one 🙂 ). They obviously believe that if I have a steady ‘relationship’ with them they will make money from other stuff: -I’ll put money in saving accounts or certificates of deposit (I think that term is understood in UK) at a relative lower rate without ruthlessly shopping around -borrow from them at perhaps a higher rate without ruthlessly shopping around, including borrowing on credit cards they offer me -do profitable business with their affiliated stock brokerage firm (this is Bank of America, so Merrill Lynch) I don’t so any of those things so they probably lose money on me. But they also don’t have to make money on every customer to make money overall. ---
**Author:** ![Flyer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/flyer/32/7298_2.png) [@Flyer](https://boards.straightdope.com/u/Flyer)\ **Post date:** [October 14, 2019, 5:04am UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/31 "2019-10-14T05:04:32Z")
> [@Bear\_Nenno](#): > > Where’d you get that idea? Even the banks that _do_ charge a nominal fee for an account usually have very minimal criteria for waiving it, such as “at least one $250 deposit per month”, or “at least $1,000 balance” or something like that. Those fees are there just to ensure the customer is using the account. I don’t know of anyone who actually _pays_ to maintain a bank account. You need to get out of the house once in a while and find out how the other half lives. There are many millions of people who cannot afford to have even $500, much less $1000, sitting around doing nothing. They may not even have that much, and even if they do, it needs to be available for emergencies, not walled off in a bank account where it’s sole purpose is to ward off bank fees. ---
**Author:** ![UDS](https://avatars.discourse-cdn.com/v4/letter/u/ecae2f/32.png) [@UDS](https://boards.straightdope.com/u/UDS)\ **Post date:** [October 14, 2019, 5:17am UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/32 "2019-10-14T05:17:48Z")
> [@Flyer](#): > > You need to get out of the house once in a while and find out how the other half lives. > > There are many millions of people who cannot afford to have even $500, much less $1000, sitting around doing nothing. They may not even have that much, and even if they do, it needs to be available for emergencies, not walled off in a bank account where it’s sole purpose is to ward off bank fees. Money sitting in your checking account _is_ available for emergencies - one of the characteristics of a checking account is that you can withdraw any or all of the balance at any time, without notice. A checking account is _exactly_ the place where you’d keep money for emergencies, because the whole point of an emergency is that you won’t have notice of it, and you may need immediate access to your money to deal with it. And, if keeping $1,000 in your checking account for emergencies also means that you don’t incur bank fees, well, that’s two birds with one stone. Obviously, you need the awareness and the discipline to leave the money there. If putting it in your checking account means that you might dip into it, or gradually deplete it, for non-emergenciesl that’s a bad outcome - no emergency fund, _and_ you incur bank fees. So for some people putting the emergency fund into a separate account is the optimal strategy, even if it does mean incurring bank charges. And of course as you point out there are others who don’t have an emergency fund to begin with, and so have no choice about using it, pending an emergency, to reduce or eliminate bank charges. ---
**Author:** ![nightshadea](https://avatars.discourse-cdn.com/v4/letter/n/7ba0ec/32.png) [@nightshadea](https://boards.straightdope.com/u/nightshadea)\ **Post date:** [October 14, 2019, 6:57am UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/33 "2019-10-14T06:57:38Z")
actually, a lot of banks wave all account fees (BofA’s is 5.95 a month)if you have an SSA/SSI direct deposit … you can also opt-out of overdraft fees if you dont let the bank cover an overdraft … but the banks here are doing the same thing as chase and wells Fargo have been targeting BofA’s customers and ive been getting " 2,3, and 400 added to your min deposit of 1,000$ flyers in the mail. ---
**Author:** ![upend](https://avatars.discourse-cdn.com/v4/letter/u/b3f665/32.png) [@upend](https://boards.straightdope.com/u/upend)\ **Post date:** [October 14, 2019, 11:40am UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/34 "2019-10-14T11:40:22Z")
> [@Mighty\_Mouse](#): > > We have a British expat colleague. He’s around 27, and just having been posted in the US, we had to show him how to write a check (for a utility connection). This is a guy with a degree from a very reputable university (top 5 in the UK probably) and four years working in a top tier firm. Not only had he never written a check, he’d never seen one written (or possibly was too young to remember). Being from the UK, we’ve probably written less than one cheque a year for the past 10. Almost everything is done by drect debit or bank transfer. Almost everything between friends(meals/trips etc) is by transfer or sometimes cash, never by cheque. Actually, I had a debate with a colleague on how oldey-worldey I was by not paying for public transport by Apple Pay! (I use a touch card, Oyster, in London) ---
**Author:** ![Novelty\_Bobble](https://avatars.discourse-cdn.com/v4/letter/n/a3d4f5/32.png) [@Novelty\_Bobble](https://boards.straightdope.com/u/Novelty_Bobble)\ **Post date:** [October 14, 2019, 1:38pm UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/35 "2019-10-14T13:38:08Z")
> [@upend](#): > > Being from the UK, we’ve probably written less than one cheque a year for the past 10. Almost everything is done by drect debit or bank transfer. > > Almost everything between friends(meals/trips etc) is by transfer or sometimes cash, never by cheque. > > Actually, I had a debate with a colleague on how oldey-worldey I was by not paying for public transport by Apple Pay! (I use a touch card, Oyster, in London) I just looked at my cheque book after reading this and the last time I wrote one was April 2010. Everything I do now is online transfer or contactless card, chip and pin has been going for 15 years now in the UK. I got my Oyster card in 2011 (a Kate and William commemorative one…oh Pippa!) but that was ditched a few years ago because London Transport now just lets you use a contactless debit card or/and NFC phone in exactly the same way. So I can easily see why a 27 year old UK resident would not have had to use a cheque book. Cash and Cheques are on their way out. I travelled to London with my son yesterday for a day out and everything we paid for was via android pay on my phone. No cash at all. The only physical transaction was collecting a paper train ticker from the station ticket machine (but booked online) and I reckon e-tickets will be coming soon for that as well. ---
**Author:** ![polar\_bear](https://avatars.discourse-cdn.com/v4/letter/p/ec9cab/32.png) [@polar\_bear](https://boards.straightdope.com/u/polar_bear)\ **Post date:** [October 14, 2019, 4:00pm UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/36 "2019-10-14T16:00:39Z")
Not from the UK, but the Netherlands, and 37 years old… I’ve never written a check ever. As long as I remember I’ve been using a debit card. First swipe and pin, then chip and pin…now contactless (same chip), which asks for a pin ocasionally or for larger sums. For what it’s worth, current accounts are free here as well (also no overdraft fees, atm fees, etc). Banking typically doesn’t cost that much…I remember how the banks tried to get me as a teenager by giving you free stuff (a snazzy pager in my case!). I also never changed banks and still do almost all I my banking from the same account (I think 90% of the people I know are still at the place where they got their first high school account). Verstuurd vanaf mijn moto g(6) met Tapatalk ---
**Author:** ![Novelty\_Bobble](https://avatars.discourse-cdn.com/v4/letter/n/a3d4f5/32.png) [@Novelty\_Bobble](https://boards.straightdope.com/u/Novelty_Bobble)\ **Post date:** [October 14, 2019, 4:02pm UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/37 "2019-10-14T16:02:57Z")
> [@polar\_bear](#): > > I also never changed banks and still do almost all I my banking from the same account (I think 90% of the people I know are still at the place where they got their first high school account). Yes, my primary current account is the same one I opened when I started full time work aged 16…mumble, mumble years ago. ---
**Author:** ![TriPolar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripolar/32/3008_2.png) [@TriPolar](https://boards.straightdope.com/u/TriPolar)\ **Post date:** [October 14, 2019, 4:31pm UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/38 "2019-10-14T16:31:09Z")
The current situation in the UK sounds like the 70s and 80s here in the US as banks offered all sorts of free services to attract customers. Maybe totally unrelated, but most of the banks ended up merging, perhaps they were trying to increase their value based on the number of personal accounts they had. Also, after a while they tried to change the terms of the accounts and add new fees but I was able to keep a free checking account for almost 20 years because NY state said they had to stick to the terms as long as the account didn’t change in some way. ---
**Author:** ![bob\_2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bob_2/32/3341_2.png) [@bob\_2](https://boards.straightdope.com/u/bob_2)\ **Post date:** [October 14, 2019, 5:29pm UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/39 "2019-10-14T17:29:14Z")
> [@Novelty\_Bobble](#): > > So I can easily see why a 27 year old UK resident would not have had to use a cheque book. Cash and Cheques are on their way out. I travelled to London with my son yesterday for a day out and everything we paid for was via android pay on my phone. No cash at all. The only physical transaction was collecting a paper train ticker from the station ticket machine (but booked online) and I reckon e-tickets will be coming soon for that as well. I read a story recently that could be true… A young woman was found in tears at a London railway station. her problem was that her phone was out of charge, and she had no way of paying for her fare home. ---
**Author:** ![Novelty\_Bobble](https://avatars.discourse-cdn.com/v4/letter/n/a3d4f5/32.png) [@Novelty\_Bobble](https://boards.straightdope.com/u/Novelty_Bobble)\ **Post date:** [October 14, 2019, 6:30pm UTC](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712/40 "2019-10-14T18:30:02Z")
> [@bob\_2](#): > > I read a story recently that could be true… A young woman was found in tears at a London railway station. her problem was that her phone was out of charge, and she had no way of paying for her fare home. Quite possible. I find myself going out often without my wallet but just with my phone as a primary payment method and a card tucked into the case as back up (and a tenner folded up in there as well just in case, but rarely used) [Previous page](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712.md?page=1) [Next page](https://boards.straightdope.com/t/how-do-banks-in-the-uk-make-money-from-current-accounts/841712.md?page=3)