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Are We Nearing The End Of Free Banking?

If you read the financial press you might be mistaken for assuming that banking has been 'free' for many years. As the UK banking sector continues to soften customers for the change from 'free' banking to regular charges for your banking arrangements many people are starting to worry. What will it mean? How high will the charges rise?

At this moment in time the truth is that nobody is aware of the level of charges the banks will bring in to service your financial arrangements. However, more and more people are making the point that 'free' banking is a myth and there have always been charges in some shape or form.

If you look at the basic of how banking arrangements operate, customers place their savings with a bank, the bank lends that money to clients at a higher rate than they are paying savers. While there is no direct charge to the savers, banks are making money from client deposits. The banks will argue that they also borrow money in the money markets for loans and mortgages, but what assets are used to guarantee these loans - banking assets, which include customer savings.

The truth is that there have always been hidden charges in the personal banking sector and while the charges will be more visible in future the myth of 'free banking' has been blown wide open.

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