a thread in which ilx interprets economics and finance, sometimes linen by linen*, and disagrees a lot (probably)

Poster, I think the con would be that I would have to carry the cash around and couldn't do the thing of tapping a machine with a card to make a payment.

also, it would be easier for someone to steal your money from you, leaving you with no money. Whereas it is much more challenging to rob a bank, plus, the bank insures your money that you have "stored" there.

Poster, I think the con would be that I would have to carry the cash around and couldn't do the thing of tapping a machine with a card to make a payment.

Also the other problem that was noted ie: doesn't seem like an employer would pay me in cash so I would then have zero money.

Also - yes - the idea that the money would be physically damaged - a good point.

― the pinefox, Friday, November 11, 2022 10:16 AM (one hour ago)

so, I think, from a first principles basis:

the cons are everything you listed and probably a lot more. the pro is, you are not trusting a third party (in finance terms, a 'fiduciary') to hold onto your money. it could be dangerous for a bank to hold onto your money, because what if one day the bank goes under, and is unable to pay out the money that everybody has deposited to the bank? (or, to make the conceptual leap - unable to pay the money that everybody has lent to the bank.)

so, the question becomes - does my money feel safer under my mattress or in a bank account? if under my mattress, you could lose it for all the reason we have discussed - termites, mold, the vagaries of nature - a fire, a flood, a tornado or hurricane could blow it all away - your cousin fagin, who has heard from your aunt beatrice of the stacks of pounds you have under your mattress, could steal into your house while away and abscond with your savings.

if in a bank, it is in an institution that you feel you have no oversight into - you don't know how the bank is doing, it could go under any minute! (maybe you have this fear because you don't understand how the bank makes money, which is why you've come to ILX to read this thread).

the government understands this second concern, because it has happened many times over in history (https://en.wikipedia.org/wiki/List_of_bank_runs). a crucial financial innovation of the 20th century has been deposit insurance! (https://en.wikipedia.org/wiki/Deposit_insurance) whereby, the government has an interest that its citizens do not spend the majority of their days guarding the pile of cash under their mattresses like smaug, because that time could be better spent doing other activities that society deems useful, such as farming, or manufacturing goods, or, even, financial services. so, the government steps in and says, please do not waste your time sitting in front of your house with a rifle and eyeing every stranger who comes by, put your money in a bank and go out and life your life, because what we will do is guarantee every deposit made to a bank in our country (up to a certain amount, of course, but which limit is certainly adequate to cover 99% of the populace), such that if your bank goes under, the insurance will kick in and you will still have your money.

all of which establishes why it is better in modern society to keep your money in a bank rather than at home, but doesn't answer your question about why is it that we have "loaned" our money to a bank, instead of "deposited" our money.

to answer that question, you can imagine the world's first bank, where somebody said, instead of keeping your cowrie shells at home, which we have established is burdensome and detracts from your quality of life, give your cowrie shells to me and I will keep them safe, in return I will give you this clay tablet which marks how many cowrie shells you have given me, just bring me the clay tablet whenever you want to retrieve some cowrie shells and I will update your tablet. what's in it for you, you ask, surely you are not the world's first altruist. well, the world's first bank says, I will charge you a fee of one cowrie shell per every 6 cycles of the moon, because I need to rent a hurt large enough to accomodate all the cowrie shells I have collected from all my other customers, and to hire the guards with mastodon femurs who will stand guard over my hut, and so on and so forth, and all of that costs cowrie shells, which costs i will spread out over all my customers.

now, let's also imagine the world's first lender. the world's first lender has made some cowrie shells by lending out her own cowrie shells to others who do not have enough cowrie shells for an immediate need, and asking only for the initial amount of cowrie shells she has lent (the principal!), and a small amount of cowrie shells - perhaps as a proportion of the initial amount of cowry shells she lent to be assessed every 6 cycles of the moon, for the inconvenience of having lent out her cowrie shells (the interest! or - the world's first financial innovation). the problem for the world's first lender, however, is that the amount of cowrie shells she can make as interest is limited by the amount of cowrie shells she can lend out - if she has lent out all her cowrie shells, she cannot make any more loans, because she has no more cowrie shells left to loan out! (later on it will be found that her activities will have led to the invention of the concept of usury, which will be enshrined as a sin. https://en.wikipedia.org/wiki/Usury)

the world's first lender realizes that she could make even more cowrie shells as a lender, if instead of lending our her own cowrie shells, she herself borrows cowrie shells from others that she can continue to make loans with. why would others lend her their cowrie shells? the same reason that she herself lends cowrie shells out - because she will pay them back with more cowrie shells, aka interest! now, here is the world's second financial innovation - the interest she has to pay out to her lenders doesn't have to be as high as the interest she will collect when she re-loans those cowrie shells out. instead, she can pass along only a portion of the interest she will earn when she loans those cowrie shells out. now, you may ask, why would you lend your cowrie shells to her, at a lower rate of interest, than directly to one of her borrowers (let's call him Bob), where you could get a higher rate of interest? you'll make more cowrie shells!

because, she'll tell you, when you ask for your cowrie shells back from her, she'll be able to pay you back no matter what - because people always owe her cowrie shells, since she is a lender, she just needs to collect from one of her other borrowers - whereas if you lend to Bob directly, who has borrowed the money to buy a farm, there is a chance that Bob will say, I spent your cowrie shells on my farm, and seeds and plows, but haven't you seen that a swarm of locusts have come around and eaten all the crops, and what the locusts didn't eat has withered and died because there has been a biblical drought, and what didn't die in the drought surely died when there was darkness for three days, and oh by the way I am moving to assyria, and I won't be leaving you my address?

you may ask, well that's all fine and dandy, but Bob's still a flight risk isn't he? she will reply - yes, that's true, but I haven't lent just to Bob, I've also lent to Alice and Cathy and Doug, who are not in the business of farming but in the business of pulling a rickshaw and building huts and crafting mastodon femurs, respectively, so I am diversified and it won't matter if Bob doesn't pay me back because Alice and Cathy and Doug will, also I will have enough cowrie shells to hire Eddie who will travel to assyria and break bob's legs and get me my cowrie shells.

so, given these choices, you may say, I'd rather lend my money to the world's first lender (let's call her difficult listening hour, because gender is a social construct) instead of Bob, because I have a higher chance of getting my cowrie shells back from her than from Bob. and let's say everything works out - the cowrie shells you have lent to dlh, are making you even more cowrie shells, in a safe way! so much so that, you go back to the world's first bank (let's call him 龜), and you say, give me all of my cowrie shells, I have been spending one cowrie shell every 6 cycles of the moon to keep them here but instead I could be lending them to dlh, where instead of paying 1 cowrie shell every 6 cycles of the moon, in fact I am earning 1 cowrie shell every 6 cycles of the moon, and dlh will also return my cowrie shells whenever I want, and is making enough from her lending to also hire guards with bigger mastodon femurs than 龜, and also her hut is bigger.

so, dlh becomes the world's second bank, and the world's first bank, 龜, goes out of business and starts going around the town square asking everyone, rather madly, "have you heard of the blockchain" before he is beaten to death by mastodon femurs wielded by large burly troglodytes.

so, that is why, when you deposit your money at a bank, you are actually lending the bank money, not "depositing" it!

(after 龜 is dead, a rumor will be spread that dlh has been using those cowrie shells she hasn't lent out to gamble at local cockfights. everybody in town, fearful that dlh has spent all of their cowrie shells betting on Big Bertha, will demand their cowrie shells at once from dlh. when dlh is unable to produce those cowrie shells, dlh will also be beaten to death by large mastodon femurs. this is the world's first bank run.)

Now do insurance!

the aristocrats!

xp - what you are omitting in this really great explanation is the role of the state and the repressive state apparatus, and that people create states to regulate themselves so that they won't constantly be beating themselves to death with mastodon femurs.

Like, this is all coming from an assumption that you, Bob, dlh, etc. have a certain assumed trust and sense of community, and aren't going to beat each other to death with mastodon femurs over cowrie shells. There is also the assumption that the cowrie shells that go back and forth are actually cowrie shells and not some lesser shell that is deemed worthless.

Like, you can also see the role of the bank in terms of utilizing the community's cowrie shells for the betterment and productivity of the community as a function of the state (as 龜 notes in their previous post) and compare it to the way the state stores, utilizes, and distributes physical force (e.g. weapons, soldiers, law enforcement). In order to maintain order and its authority, the state should have a larger collection of mastodon femurs than any individual or family or associated group within the state. The collection of cowrie shells for lending and borrowing is just another source of power for the state.

When my dad died we found a disturbing amount of cash hidden in coat pockets and such, he was a bit of a crank about banks and such

Vague stop repeating phrases challenge

Now do insurance!

― G. D’Arcy Cheesewright (silby), Friday, November 11, 2022 10:17 AM (thirty-nine minutes ago)

what kind of insurance, or just, insurance in general?

Idk whatever, I read something a while ago about police departments becoming uninsurable because of the pigs doing too much pig shit all the time and was thinking about how insurance may be the subtle engine of societal change

Also I just want to read dayo’s cowrie-shell-based explanation of risk pools or whatever

I can do insurance. And insurance has historically been an engine for societal change. First forms of insurance were insuring ships and other forms of trade over distances which allowed trade and mercantilism then capitalism to flourish. Might not be the societal change you were looking for.

Deciding which things companies can and can't be held liable for is an underrated aspect of government power. For instance, deciding that internet companies are not responsible for things users post (unlike say book publishers) basically created the internet in its current form. Or deciding that gun manufacturers are not liable for things people do with their guns.

well, it's true that the main way that insurance is different from gambling, is that the risk involved is partially determined by societal factors, as opposed to just statistical data, whereas gambling only relies on statistical data and/or superstition. Granted, you could argue it's just statistical data _about_ societal factors.

I mean, if you think about how "pig shit" (not in the Thunderdome sense) is punished/accepted and societal changes in re that ... if it is becoming way more likely that cities have to pay out large sums of money in legal settlements because of pig shit due to juries, judges, etc. determining that pig shit isn't acceptable, then insurers should determine that the financial risk to them for betting on the pigs is too great.

However, insurance, itself, is a construct. Insurance, and insurance requirements, are definitely more a factor of the Repressive State Apparatus as opposed to the Ideological State Apparatus.

You can even think about how societal factors have created certain types of insurance! Like coverage against sexual harassment, discrimination, molesting kids, etc.

Conversely allowing almost unlimited liability for certain claims has made companies very risk averse in other areas, which has stifled innovation.

First forms of insurance were insuring ships and other forms of trade over distances which allowed trade and mercantilism then capitalism to flourish. Might not be the societal change you were looking for.

I would argue that it goes back farther, to dowries and other payments made around marriages. Also, the concept of the "bondsman" (which has evolved into the oppressive bail bond industry), and people's service functioning as insurance premiums.

Also I just want to read dayo’s cowrie-shell-based explanation of risk pools or whatever

― G. D’Arcy Cheesewright (silby), Friday, November 11, 2022 2:01 PM (thirty-four minutes ago)

I don't really understand insurance that well, tbh! the way I think of insurance is the world's worst lottery.

spousal insurance, for example, is a lottery in which everybody with a spouse is forced to buy a lottery ticket every month for as long as their spouse is alive. the proceeds (or 'insurance premiums') from the lottery tickets are kept by the insurance company, who sets aside a certain amount to pay expenses, but otherwise sits on the money. the way to win the lottery, nobody wants to win - your spouse has to die unexpectedly! when your spouse dies unexpectedly, you win the lottery, even though you would rather not win! you'd rather not have your spouse die in a plane crash instead of a million dollars. unless you've been feeding your spouse arsenic with his morning tea! then, it is the world's best lottery for you.

(you might ask, is there something the insurance company can be doing with that pot of money from the lottery tickets while it waits to pay out on an insurance claim. absolutely! this has led to insurance being a very stringently regulated enterprise by the state, because you can imagine what might happen otherwise.)

Conversely allowing almost unlimited liability for certain claims has made companies very risk averse in other areas, which has stifled innovation.

― o. nate, Friday, November 11, 2022 2:23 PM (eighteen minutes ago)

the actual secret engine of capitalism, imo, is "limited liability" (https://en.wikipedia.org/wiki/Limited_liability)

where are people forced to have "spousal insurance"?

(also i just want to say everything i have been posting itt is just matt levine-lite, a bad imitation of matt levine, and if you'd like to talk about matt levine please head on over to silby's thread Matt Levine’s Money Stuff )

where are people forced to have "spousal insurance"?

― sarahell, Friday, November 11, 2022 2:45 PM (one minute ago)

sorry, that is a bad example - a better example is car insurance if you own a car, but not everybody is sad when they lose their car. i guess i could have also used health insurance - something only americans would understand, and which would not be fair to our companions across the pond.

I mean, lots of people do have life insurance for their spouses. Life insurance is one of the most common employee benefits in the US. One could argue that the "force" comes from Ideology (the pressure for care through capital security, a "responsible" adult has insurance, etc.) but not the Repressive State Apparatus, which requires one to have insurance on a car if you are driving said car, otherwise the car could be seized ... or insurance requirements for tradespeople and certain professions, where you could lose the ability to legally make a living without said insurance.

Thus, there are different models of insurance -- there is the "3rd party" insurance, which is coming out of PBKR's historical reference to the shipping industry, but for various things, it is also possible to "self insure" without a 3rd party.

And ... this notion of "self-insurance" is tied to the Pension Funds that we were talking about earlier

I will write something up later, but my professional experience in insurance is limited to US commercial property/casualty insurance so I have limited knowledge of personal lines (i.e. homeowners/auto insurance) and almost no knowledge of health insurance. Some of the very basic principles are the same though.

can you write about how commercial property insurance is related to building & fire codes?

it would be cool to have someone to bounce these things off of / discuss it with

Insurance is a risk sharing and risk spreading mechanism. Assume an insurance company, PBKR Indemnity, sells a single policy of insurance (a contract) to a business, ILXCO (the policyholder), for $100 (the premium). If ILXCO has a $1,000 claim, PBKR Indemnity may be in big trouble since it only has $100 of premium plus whatever other capital it started with. If PBKR Indemnity sells 100 such insurance policies to 100 franchisees of ILXCO for $100 each ($10,000 total premium), then if one or even a few ILXCO franchisees file claims for $1,000, then PBKR Indemnity should have sufficient funds to pay claims and continue in business.

So an insurance policy is a contract between an insurance company and its policyholder (the purchaser of the policy) whereby the insurance company will pay the policyholder in the event of certain losses specified in the policy. Some policies are considered to provide "first party" coverage: the claimant under the policy is the policyholder themself, so that if ILXCO buys a property policy from PBKR Indemnity and then has a fire that damages ILXCO world headquarters, PBKR Indemnity (the insurance co) will pay ILXCO, the policyholder, for the damages to their building. Other policies are considered "third party" coverage: the claimant under the policy is a third party making a claim against the policyholder, so that if ILXCO buys a liability policy from PBKR Indemnity and then is sued by a third party, PBKR Indemnity (the insurance co) will defend ILXCO (the policyholder) from the claim by the third party and indemnify ILXCO (pay on behalf of) any damages actually awarded to the third party against ILXCO.

So how does insurance work from the insurance company's standpoint? PBKR Indemnity sells a policy to ILXCO for $100 in premium. PBKR Indemnity bases that premium on an insurance rate that is often, but not always, previously filed with or approved by the state (in the US, insurance is regulated by the individual states, not by the Federal govt). The rate might be based on a number of factors depending on the type of insurance but always involves an actuarial projection of future losses. In the case of a property policy, rate is often based on location, construction type, age, and condition of the building. For a liability policy, rate is often based on the policyholder's headcount, revenue, or other metrics deemed relevant by the insurance company, with loss experience (prior claims of the policyholder) often a significant positive or negative factor. The state may regulate what factors can be used or not used by an insurance company in setting rates. In the past, insurance companies would base rates for personal lines (like personal auto or homeowners insurance) on income level, gender, marriage status, age, zip code, employment, race, etc. Some of these factors (but not all) are now prohibited by law.

So what does PBKR Indemnity do with the $100 premium it receives for the policy it sold to ILXCO?* Well, PBKR Indemnity knows it may have to pay claims (losses) on ILXCO's policy at some point in the future, so PBKR Indemnity sets aside (reserves) a portion of the premium for payment of these potential future claims. The amount it sets aside is again based on an actuarial analysis of likely future losses. These reserves are determined and combined in the aggregate then invested to generate a return (investment income). The amount and type of investments PBKR Indemnity can make are heavily regulated by the state. PBKR Indemnity will also use premiums to pay prior claims and current operating and other expenses.

Each year, PBKR Indemnity will compare the premium it took in to the amount of claims (actual losses and loss expenses, plus loss reserves for claims not yet reported**) and non-claim expenses it paid during year. The losses divided by the premium are the insurance company's "loss ratio" - if PBKR Indemnity wrote $100 in policies during the year and had $63 in losses paid, loss expenses, and reserves, then PBKR Indemnity's loss ratio is 63%. If PBKR Indemnity also had $35 in (non-claim) expenses (salary, overhead, commission, etc.) during the same year, then PBKR's "expense ratio" is 35%. The "loss ratio" plus "expense ratio" is referred to as the insurance company's "combined ratio", which is a measure of the profitability of the insurance company for the year. If the combined ratio is over 100%, the insurance company lost money from underwriting for the year, if the loss ratio is under 100% the insurance company made money from underwriting for the year.

In our example, PBKR Indemnity has loss ratio of 63% and an expense ratio of 35%, for a combined ratio of 98%, meaning PBKR Indemnity's insurance operations made money for the year. Traditionally, and in high interest rate environments, insurance companies would try to write to a 100% combined ratio, meaning break even from insurance operations, and make their profit off their investment income.

*Often the insurance company pays a % of the $100 of premium (the commission) to a broker/agent who sold the policy to the policyholder. Commission % varies by type of policy/coverage, but in property/casualty is usually in the 10-15% range. This commission is one of the expenses that is factored into the insurance company's expense ratio, since it is an expense of selling the policy and obtaining the premium.

**This is very surface level and I could do a deeper dive on many of these topics, such as how an insurance company handles reserves if it would help.

thank you PBKR! ... so, we might also want to talk about these actuarial projections! For certain types of losses these projections are way easier to make (i.e. more accurate) than others, isn't that right? Like, car insurance. There are a lot of cars, a lot of drivers, a lot of incidents resulting in losses related to cars and drivers. Thus, I would assume, the actuarial projections for auto insurance are fairly accurate, because of the large data set.

For other types of losses, the projections are relying on a lot less actual data. Either because of the rarity of the type of loss, or the relative uniqueness of the facts and circumstances around them. Earthquake insurance is a good example, I would think. Fire insurance for commercial buildings is potentially another (though there are a lot more fires than earthquakes that cause significant damage and/or loss of life). Both Earthquake and Fire go into Property Insurance policies.

In the case of a property policy, rate is often based on location, construction type, age, and condition of the building.

Isn't it also based on the use of the building? And size? And then there is the issue of the factors that constitute the "condition" of the building. ... I'm gonna stop before I get super nerdy.

For certain types of losses these projections are way easier to make (i.e. more accurate) than others, isn't that right? Like, car insurance. There are a lot of cars, a lot of drivers, a lot of incidents resulting in losses related to cars and drivers. Thus, I would assume, the actuarial projections for auto insurance are fairly accurate, because of the large data set.

There are obscure/risky coverages where there is little data. Stuff like that often doesn't get written in the admitted (licensed) insurance market, but usually goes to the surplus lines market where there are far fewer regulations and consumer protections. Surplus lines insurers don't have to file rates and can pretty much charge whatever they want.
There are limits on how consumers (commercial, mainly) can access that the surplus lines market in theory.

For more routine coverages, it is less a matter of accurate or inaccurate data than it is maintaining or not maintaining underwriting discipline. Insurers will sometimes charge less than the rate (i.e. data) would indicate or under-reserve their claims to chase (short-term) profits, resulting in poor loss ratios and potential insolvency.

Isn't it also based on the use of the building? And size? And then there is the issue of the factors that constitute the "condition" of the building. ... I'm gonna stop before I get super nerdy.

Use and size both are factors, since they have bearing on the value of the building. That is the starting point of property insurance because if the building is a loss the value of the building is ultimately what the policy will pay.

I'm curious about this surplus lines market -- could you use it to get some measure of the risk of ownership for properties in flood zones or wildfire zones where most companies won't offer coverage? If not, how else could you try to estimate it? It seems like for earthquakes in particular, being closer to a faultline ought to raise your hypothetical rates even if most places won't offer actual coverage.

Actuarial tables are constantly being re-weighted and refined as new indicators are brought into the overall equations and trend lines revised by emerging data. The recent decreases in life expectancy among US adults is an example of a totally shocking trend reversal in the actuarial universe.

xp Not that familiar with earthquake or fire in CA but I would think if you can't get insurance that would tell you something about the risks of a property. Generally speaking the surplus lines market will ensure risks that the admitted market won't touch, albeit at a high cost. I'm sure there are risks/classes that surplus lines won't touch at any price.

Flood is the same way except the federal govt has created a national flood program where FEMA backstops (100% reinsurance) certain flood policies for properties that would otherwise not be insurable. One criticism of the national flood program (which I kind of subscribe to) is that this encourages more risky behavior by allowing people to build (and rebuild) in flood prone areas. Obviously global warming has exacerbated these kind of issues.

Would it be feasible to have such insurance be mandatory but with rates allowed to rise to whatever level makes sense (even if that level is absurdly high)?

Not really sure. Flood insurance isn't really insurance on some level because of the federal backstop - the program is notoriously under water (pun intended).

Flood insurance is often mandatory in one sense - a bank may require it in order for you to get a mortgage. There are other examples of mandatory insurance - auto and workers' comp.

It seems like for earthquakes in particular, being closer to a faultline ought to raise your hypothetical rates even if most places won't offer actual coverage.

I think that this really depends on the construction type of the building -- and the condition -- has it been seismically reinforced, etc. In various places, there are incentives and mandates for seismic reinforcement of certain building types ... back in 1989 it was URM (Unreinforced Masonry) and recently it's soft story buildings ... there was some super in depth article years ago about how shitty and worthless earthquake insurance was, but idk if that's still the case.

Would it be feasible to have such insurance be mandatory but with rates allowed to rise to whatever level makes sense (even if that level is absurdly high)?

Reading this again. If you are asking could the govt legislate changing homeowner behavior by mandating flood insurance even if the cost was prohibitive, I think they could though I imagine that would be politically very difficult. But I have heard that FEMA has bought damaged homes in certain flood prone areas and torn them down rather than paying the homeowner to rebuild.

Which accomplishes the same thing in essence.

re the statement discussed upthread, that depositing money in a bank is loaning money to a bank.

For instance, like loaning Mark £10 to buy his Quality Street (cf top of thread).

Some reasons that people might find this difficult:

1: it is never described this way. A bank says it will loan you money, but it never says "loan us money, by depositing money in our bank". As this is never said, it is no wonder if people do not think it is the case. Perhaps a massive deception has been going on.

2: if my employer pays me, say £1000, and it goes into my bank account (before I am even aware of it) - then this implies that the money is loaned out before I even have it myself. This contradicts the practice where I have £10 in my hand and can then decide to hand it to Mark S.

3: if I lend Mark S £10, he has it till he pays it back to me. But with the bank, I can take out £20 from a cashpoint; go into M&S and pay £10 for a box of quality street with my debit card; go on to online banking [NB this is not very easy, but it does exist] and move £100 from account A to account B ... In other words the money appears to be mostly under my control. It is pretty much as if I have the money. If I have taken out the cash from a cashpoint, it is literally the case that I have the money.

All this differs from the experience of loaning Mark S £10.

You may already be clear on this, but FWIW, in the case of 2, you "decide" this when you fill out the direct deposit paperwork with your employer.

Certainly I make an agreement that the money should be paid into the bank. "For safe keeping", as I would imagine it.

But my impression is that it's my money. Not that it's loaned to someone else before I ever have it.

Well, you're wrong then! :)

I've been reading, and trying to understand, this long post above.

you can imagine the world's first bank, where somebody said, instead of keeping your cowrie shells at home, which we have established is burdensome and detracts from your quality of life, give your cowrie shells to me and I will keep them safe

The character here doesn't say "lend me your cowrie shells". Their statement, rather, implies the idea of "safe keeping" that has already been mentioned.

The story also implies that the bank pays money (in this case shells) to its customers. But my bank doesn't do that.

Many banks do pay their customers. I get some interest on my current account, albeit only a fraction of a percent. Even if your account doesn't pay interest you're getting something for 'nothing', in that it has buildings, employees to help you and complex and hopefully secure IT systems to allow you to set up direct debits, standing orders and make withdrawals form cash machines etc.

I'm sure you don't think banks are doing this out of altruism, this infrastructure doesn't come cheap. It's a pact in that if you deposit money with them, they can use it for mortgages, business loans, currency speculation etc, in return you get cheap or free banking unless you have an unauthorised overdraft.

At the very least pinefox you should look to switch to an account which does pay interest.

That post makes sense.

I agree, I don't seem to be getting enough out of having my money in a bank. Whether there are better alternatives, I don't know.

pinefox, perhaps you could switch to one of these banks?

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

It's also worth saying that if you need access to a physical bank e.g. for depositing cash etc the Post Office allows you to do so at their branches for several banks. https://www.postoffice.co.uk/everydaybanking

These ones?

Top-pick savings accounts
Easy-access savings: allows withdrawals
Aldermore – 2.75%
Skipton BS – 2.65%
Notice savings: give notice to withdraw
OakNorth Bank – 3.07% for 90 days
OakNorth Bank – 3.2% for 120 days
Fixed-rate accounts: must lock cash away
Atom Bank – 3.95% for nine months
Kent Reliance – 4.45% for one year
RCI Bank – 4.85% for two years
Tandem – 4.9% for three years

I haven't heard of them. Don't know if that matters.