HSBC could start charging for current accounts

Other banks could follow suit if HSBC breaks the mould and levies fees, experts warn.

HSBC has signalled the end of free banking after suggesting it is considering charging for its current account services.

The bank said during a third quarter trading update that low interest rates in countries such as the UK meant it was effectively losing money.

This could mean the introduction of fees for millions of customers to use HSBC’s current accounts.

A spokesman clarified that the lender is currently committed to free basic accounts but is reviewing its charges.

It comes amid rumours that the Bank of England could soon shift to negative interest rates, which effectively charges retail banks to hold their money in order to encourage them to lend.

These costs could be passed on to customers through current account charges.

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Andrew Hagger, of Moneycomms, says banks have been hesitant to be the first to scrap free services.

He says: “The end of free banking has long been talked about but understandably, up to now, none of the banks wanted to make the first move.

“If HSBC does introduce a fee for its standard current accounts I would expect other banks to follow suit within a matter of months.”

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But Rachel Springall, personal finance expert at Moneyfacts, says free banking is more of a myth than people may realise. 

She says: “Current accounts usually charge for services or perks and with the pandemic and low interest rate environment, providers may be struggling to sustain offers or a service to customers without the consideration of changing funding requirements or fees.

“Today most banking customers will need to fund their account or pay a fee to get rewards or perks and if they dip into the red it will usually charge them for doing so - basic accounts sit outside of this of course. 

“As overdraft fixed fees were banned this year, this would have also hit current account providers and some have already moved to rein in perks or increase fees on their accounts since this came into force.”

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