With the cost of living, the temptation to spend is so great, and jobs at risk due to economic slowdown along with the sliding house price market, the banking is far from being a free service.
People arranging overdrafts are subject to a arrangement fee every time they request a new limit of further borrowing on their overdrafts. The cost to the bank is negligible in arranging the small amount of additional finance. The banks also levy interest that is charged to the consumers who enter authorised overdraft limits as well as heftier charges upon unauthorised overdrafts. Barclays bank charge customers at the moment and letter warnings
Then the little or no interest paid upon credit cards that have credit balances is another area where the banks make their money in investing in safe areas or which provides the bank in generating liquidity in authorising borrowers of loans, mortgages to have their finance.
Banks these days tend to offer a range of savings and current account products that have special benefits to certain types of account holders. These special accounts tend to involve paying a subscription on a per monthly basis which gives the account holder certain benefits, such as lower interest charged on their credit card, the travel insurance is also provided free or at a discount and so on. The banks make their money by advertising loans though most loans also include payment protection insurance which is an additional extra charged against the loan.
Arrangement fees and legal fees are also often added to a loan or mortgage which increases the total repayment amount beyond the advertised interest rate and monthly repayment schedule. This has the effect of potentially exceeding the term of borrowing and also it places greater pressure by adding extra small amounts to the total amounts that have to be repaid. Also there are payments for late or missed payments which vary. Then if someone is in serious trouble the banks might repossess the house if a customer is in serious repayment difficulties and has no way of keeping up the repayments.
Banks advertise the student loan service products as being interest free 0% products, though this does not take into account the small rate of interest charged upon student accounts and also the conversion of a student account to a current account that has a paid subcription. Such is a students own level of typical debt owed on that account that it can take a lengthy amount of time to repay and hence the banks are able to progress further by making these subscription based service accounts. These fees of subscription accounts are currently charged from 9.95 a month to around 14.95 a month. Some are around 19.95. The bank customer service assistants make a special attempt in promoting the benefits of using these paid current account types and are relatively quiet and give the paid subscription accounts good lip service.
Banking also is not free for those taking out loans, credit cards are for those who take out other borrowing related products from a bank. For those people who take out car, travel or health insurance from a bank, the costs incurred at to the costs of doing business with a bank. I would rather not allow myself to be drawn into taking out unnecessary financial products from banks. Certain products are helpful in later years, though at a young age these financial products I find unsuitable for myself and require no thought.
Free banking facilities exist for those in credit on a regular basis.