UK Bank Charges
With investment bank losses totalling £118 billion pounds, it is perhaps little wonder why banks need to impose such high bank charges for unauthorised borrowing, unauthorised overdrafts or simple mistakes by their customers. The problem seems to be that although the banking industry kindly send us these changes to our Terms and Conditions, and say “If you would like to close your account, you can do so” – the fact is that even if you could close your bank account, what other options are we being left with? And the banks know this.
Not content to have charged interest on overdrafts (approved or not), it seems that the major banks are now looking at more ways of grabbing your cash. One of those methods is to start charging customers just for simply using an overdraft, and the two banks featured here are Lloyds TSB Bank and Santander (formerly Abbey National).
Lloyds TSB have now introduced what they call the Monthly Overdraft Usage Fee – put quite simply if you have an authorised overdraft of say £250 just as an example, but you go overdrawn by £10.01 in your monthly billing period, then you will be charged £5, even if your next monthly billing period is only a few days away! But what happens if you go into an unplanned overdraft?
Say for example you use an unplanned overdraft on one of these accounts -
Classic Account, Added Value Account, Student and Graduate Accounts
And you have not got an agreed overdraft limit, then you could easily end up paying anywhere between £25 and £85 that month on bank charges alone, because as TSB Bank points out: “You will only pay Unplanned Overdraft Daily Fees for up to a maximum of 8 days in any monthly billing period” I’m not sure that is supposed to make us feel better. If you would like to download a copy of their latest Banking Charges – aptly entitled “Everything you need to know in one guide” then please do so.
Santander are applying similar charges (effective from 16th March 2011) and again, the charges can vary tremendously. As Santander put it:
“If you hold a Santander current account, we will no longer charge you debit interest or a Monthly Fee when you use an Arranged or Unarranged Overdraft. Instead we will now start to charge you Daily Arranged Overdraft Fees and Daily Unarranged Overdraft Fees. This will be as well as Paid Item Fees and Unpaid Item Fees”
Their arranged overdraft fees start from 50p per day, capped at a maximum of 20 days – that can mean £10 a month if you use your arranged overdraft on certain types of accounts, these being the Preferred In Credit Rate Account, Premier Direct, Premier and Current Accounts. If you use one of those accounts, and you have an unauthorised overdraft, then this climbs steeply to £5 each day and could cost you £100 a month as this again is capped at 20 days, plus of course any paid or unpaid item fees at £25 each time a transaction is presented!
To read the latest Santander Bank Charges you can click here and it will open their PDF formatted document for you.
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Great article – the Lloyds charges do seem extremely high, as do most unauthorised overdraft charges these days.
I work for Which?, the consumer rights organisation, and we’ve just redoubled our efforts in campaigning on this issue. The coalition government has pledged to do something about unfair bank charges, and they’re looking into it at the moment. If anyone reading this feels strongly about them, I’d urge you to email your MP (we’ve got a tool that can help you do it quickly and easily – LINK to Which site). If we can encourage MPs to support us on the issue, we have a much better chance of encouraging the government to take action on unfair bank charges.
Hope this is helpful!
Nikki Whiteman (WhichAction – part of Which? the consumer rights org)
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