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Banking should be like computing August 25, 2006

Posted by britishbullblog in Geek, General, Personal, Questioning, Whinging Stuff.

I have a loathing for banks and most financial institutions for many reasons, but mainly because they have too much control over peoples lives. Anyway, if I could live my life without having to be associated with banks I would be a much happier person.

I know that I am next to useless at budgeting for future financial commitments. I can happily manage my rent payments for example as that is regular i.e. every month. However, things like utility bills, car repairs, house repairs etc…I am rubbish at budgeting for. Anyway, I was just thinking of ways in which banks could be improved that might help me overcome my inadequacies in this area.

It struck me that my problem is that if money is in my account I will tend to spend it, of this I am sure others can relate. So I thought why can’t you have a folder system for your finances, much like you do on a computer.

You could access your current account and then have a number of sub-accounts where you could set-up a standing order for a specific amount of money to go into each sub-account every month. So for example, you could have a sub-account named as ‘Car Repairs’ and each month (on pay day) £50 is automatically transferred. Come service time you would have a nice stash to cover any unexpected expenses. If that £50 had remained in my current account it would gradually get spent, leaving me in a familiar predicament of thinking, bugger, where’s the cash going to come from for this?

Now this should be possible, but banks (certainly in the UK) don’t like you having lots of accounts. Why?

Well, it’s more paperwork for the bank so you would be a more expensive customer. Secondly, banks like you screwing up because they make money of people who screw up.

Does anyone else suffer the same frustrations?
What do you think of this idea?

I would enjoy hearing your thoughts.



1. britgirl - August 26, 2006

You really don’t have to have anything to do with Banks. At all. Just stash your money under your mattress and hey presto – no need to interact with a bank at all. Of course you might find it rather difficult paying for or getting other services. But that might be a price you feel is worth paying.

On the other hand if you are that useless at managing your money perhaps you need banks a little more than they need you. A bank’s job is to provide a service, make money and return it to investors. Just like any other business.

Not to compensate for your being unable to budget. If you are unable to budget, there are many books on budgeting that you can get – either cheaply or out of the local library. Having multiple accounts won’t solve your problem. And most people have no idea what it costs for a bank to administer multiple accounts costs that are passed on to customers. It’s expensive. You can already have a savings account & current account. Why do you want even more when you can’t even manage keeping money in one? You can set up automatic bill payments so that all you have to do is make sure the money is there. If you can’t even do that it isn’t the banks’ fault.

And as for banks wanting you to screw up, that’s the usual BS one hears from people who write cheques for which there are no funds to cover, go overdrawn without permission or exceed their limits on the credit cards.When you sign your contract you actually agree that if you do any of these no-no’s you are going to pay. If you do none of these things you will never pay any of these fees or fees in general. Except if you live in North America where you pay for all banking services.

2. britishbullblog - August 28, 2006

Fascinating points Britgirl and I do agree with you on a number of them. However, I think you slightly misunderstood my suggestion. It wasn’t that I would like lots of accounts, as I agree that would do nothing except cause more issues. My idea was that it would be interesting if an individual could compartamentalise their account, much like you do with your folders on a pc. The person still only has one account, but that account is divided into however many compartments the person wanted. They could then choose to split the funds as they desired into these compartments. Then the debit/cash card still worked, but couldn’t draw funds from these compartments. Instead the person would have to physically move the money from a compartment in order for it to be spent. This additional action would perhaps make people less likely to fritter money away on rubbish when they’re out and about.

This article makes interesting reading – Fight the unfair charges.

With reference to your last point, and as the article highlights, banks make over 1 billion every year from charges. I can see why they would prefer to be without these funds.

3. britgirl - August 29, 2006

Actually, Standard Life used to offer something like that – it was called a pooled account. But it wasn’t for everyday spending, more for savaing by a number of people. So not quite the same think, though along the same lines… Thing is, budgeting is hard :)and it’s so easy to nip over to the cash point, butI’ve not found any way that works more than budgeting. And, believe it or not, it actually gives you control over your money, because at any one time you know what you have.

Never mind the multiple compartments, which would cost an arm and a leg to administer (do you really want to give banks more reason to charge you more money??

You can get the same effect with a cheap ledger book from WH Smiths. I agree a lot of bank charges are seen to be unfair (and yes, I think some are) but they are meant to be a penalty. If you get an approved overdraft you don’t pay a whopping big o/d fee that you do if you go into unauthorized borrowing. Same with CCards, missed payments, NSF etc.( I will read the article), but where do people think the money comes from if they wirtie a cheque for which there are no funds?? If you are charged a fee when you should not have been though, that is different.

4. britgirl - August 29, 2006

Did read the article, and o.k. customers are going to court to try and claim back money…and yes in many cases when the cost is small banks will not contest as it isn’t worth it to them.

Plus, if you feel you have a good reason you shouldn’t be charged you can write to the bank and challenge the charge. It will be interesting to see how many people manage to claim money back though. And I still say it’s far better not to go into unauth overdrawing – especially when you can get an approved one for a fraction of the cost.

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