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5 "Tells" that the Stock Markets Are About to Reverse

HBOS Halifax Taking Extra From Customers With Fee Structure Changes

Personal_Finance / UK Banking Oct 22, 2009 - 11:51 AM GMT

By: Nadeem_Walayat

Personal_Finance

Best Financial Markets Analysis ArticleThe Halifax, one of Britains biggest tax payer bailed out banks that was forced to merge with Lloyds TSB to avoid bankruptcy has been busy sending customers correspondence warning of proposed changes in the way it charges fees effective from 6th December 2009.


Summary of Changes

  • No Interest paid on credit balances
  • No Interest charged on overdrafts, instead the Halifax will charge a flat fee of £1 per day for agreed overdrafts of upto £2,500 and £2 per day for overdrafts of more than £2,500. Many customers have overdrafts of as little as £100.
  • Unauthorised overdraft fee is now £5 per day instead of £35 per transaction.

The implications of this change is to hit those people that regularly go overdrawn for small amounts, where you can end up paying an extortionately high equivalent interest rate i.e. going overdrawn by £50 for 3 days a month would result in a fee of £36, against interest at 10% of less than £1.

However those that go overdrawn occasionally by near £2,500 would still be net losers though not on the same scale as above i.e. the £36 would be against an estimated interest fee of £25.

It gets much worse if you go overdrawn for small amounts for longer periods of time, say if your overdrawn by £250 for 20 days per month, then the annual fee will be £240 against an interest fee of just £17!, that's X14 more! In my opinion this is a total rip off !

The Halifax as part of the HBOS / LLoyds TSB group is a part tax payer owned and supported bank. Tax payers are being forced to keep this bank in business whilst at the same time being squeezed hard. I could suggest moving to an alternative bank, but virtually all of the major banks and credit card companies are out to squeeze cash out of their retail customers as recent analysis illustrates -

01 Oct 2009 - Dormant Credit Cards Warning, Immediate Action Required as Good Customers to be Penalised

22 Sep 2009 - Bailed Out Banks Not Lending, Sitting on Tax Payers Cash

The Banks have no incentive to lend the money out under the current artificial banking system as a consequence of tax payer bailouts. The bankster abuse of tax payer funds is not just limited to sitting on cash as when they do lend money it is far in excess of the interbank rate of 0.57%. In reality the real interest rate should vary between interbank rate plus 0.5% to 1%, depending on the customers credit rating. However the actual amount being charged to customers on the standard variable rates ranges from interbank rate PLUS 3% to 5%, far beyond that of how a competitive banking system operates as the below graph illustrates.

My advice is to keep a close eye on changes in fees and to do the sums as the banks such as Halifax are sneaking in huge increases in fees under the guise of making their fee structures easier to understand.

Now watch the bailed out banks declare huge profits for failure whilst the Government, Bank of England and FSA Regulator twiddle their collective thumbs.

Source:http://www.marketoracle.co.uk/Article14432.html

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 400 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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