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Bank charges


The amount extracted by banker from their cutomers as payment tor services rendered in operating a current account on their behalf. They cover not only the handling of cheques but also the provision of other services such as meeting standing orders and processing credit transfers and will include interest on overdrafts and a notional commission. Practiccs vary between banks but generally the pcrson with a small account will pay more; this is justified by the claim that such accounts involve much work and little profit. Banks have frequently been known to waive charges and present inter-bank competition has led to the introduction of charge-free current accounts in certain clearing banks, always provided that the account is not overdrawn. Other banks impose charges only where the balance falls below a fixed minimum. The disadvantage here is that if an active account drops fractionally below that minimum on just one occasion then charges will be applied to the whole quarter.

The large public company often escapes charges due to the disinclination of the bank to risk losing a major customer, particularly one whose funds are generally substantial and earning interest for the bank. The local manager normally has to account to his head office if an account is lost and for that reason alone will frequently go to considerable pains to avoid losing valuable


Reference: Oxford Press Dictonary of Economics, 3rd edt.