How To Beat The Bank Robbers
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Bank accounts are both simple and mysterious. They are simple, because you put money in and take it out, like magic. They are mysterious because most people never bother to read the terms and conditions information that goes with the bank account.
They probably don’t read updates to the conditions either. Recent research from a leading financial comparison site shows that 41 per cent of people do not know their standard overdraft rate and 19 per cent of people are always in the red. This is why some people get a shock when they run into trouble with their bank – and find themselves paying over the odds for the privileges.
Say the phrase ‘bank charges’ and you will get hundreds of stories from people who have fallen foul of their bank’s conditions. It’s easy to do. Even if you’re a good money manager, the chances are that at some point in your banking career you could write a cheque for more than you have in your account.
When you get the dreaded ‘insufficient funds’ letter, you will also get a hefty bank charge and pay a high rate of interest on that sum.
Going over your overdraft limit can also cost you dearly. Like other unauthorised transactions, you can end up paying dearly with charges that are way above the amount you are overdrawn by. This piles debt upon debt, which is hard on your already stretched finances – and expensive, to boot.
But your costly mistake is big business for banks. A recent survey by Which? Magazine suggests that in the past year 43 per cent of current account holders have paid £4.7 billion in overdraft charges.
And that’s likely to increase, as many banks have shortened or abandoned grace periods before levying charges and have upped interest on unauthorised balances as well. That’s a reaction to a recent ruling by the Office of Fair Trading on credit card penalty charges – another money spinner for the banks.
What the banks are counting on is that most people just sigh, groan and pay up these hefty sums, vowing never to get into the red again. But you don’t have to pay up if you think the charges are unwarranted – and many people have succeeded in getting their money back.
While we’re not advising you to abuse the system, it’s worth knowing that many bank charges are not legally enforceable. If you have the right knowledge you can challenge your bank’s charges quite legitimately.
