Banks make billions from overdraft charges

According to a recent report the major banks in the UK have been making around £2.5 billion a year in profits from charging consumers extortionate fees for going into the red with their overdrafts.

The issue is still at the centre of an ongoing court case, but banks have already netted a fortune in profits from the overdraft charges that they have imposed on consumers.

Whilst the Office of Fair Trading and other consumer groups have claimed that banks are charging unlawful and unfair fees when people exceed their overdraft limits the banks have defended these fees – although they will be liable to repay billions of pounds if they lose the ongoing court case into banks charges.

One banking official said: ‘In many other countries, people have to pay for their current accounts. We’ve polled customers and nobody wants to pay a monthly fee for their current account. We have costs maintaining the network and overdraft charges are charges for a service. Fees for that service help provide free banking.’

An official from the British Bankers Association stated: ‘Banks believe their fee structure is clear and obvious because they make it clear in their terms and conditions when they write to customers.’