Bank charges - don't get stung

Following the Supreme Court's recent ruling, the OFT have decided to drop their investigation into the legality of bank charges. So what next? Despite the ruling, banks have already started changing their charging procedures following pressure from the government. What can you expect to pay now?
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Banks charge for the various services they provide. These can vary from bank to bank but generally you will be charged on a monthly or quarterly basis. The typical services you will be charged for are: overdraft facility, unauthorised overdrafts, extended overdrafts, stopped cheques, bounced payments, additional statements, cash withdrawals abroad and currency conversion fees.

The signs are that some banks may switch to flat fees rather than interest payments. The Halifax, for example, has already changed to charging one pound a day for their overdraft rather than a monthly interest fee. The Bank of Scotland has implemented the same change. These are the main fees but your account may have others. Quiz your bank for a full list of charges even if you don't anticipate getting into difficulties. Budget carefully, you can be charged as much as £35.00 if you break your overdraft agreement. Some accounts will provide free overdrafts, if not you will need to arrange one. Interest rates vary but you can pay as much as 19 per cent on your overdraft balance.

Tips to avoid charges

  • Don't go over your limits
  • Switch accounts
  • Get permission/inform your bank if you think you're about to go overdrawn
If you are opening an account try a comparison website. Moneysavingexpert or Moneyspermarket should be able to help. You will be able to earn interest on your money if you frequently have a cash surplus, so shop around for the best rates. Some banks will give you cashback if you switch your bank account or they may offer you an interest free overdraft. Don't put up with a second rate service, there's plenty of competition out there.

If you are experiencing problems or want more information about charges contact the Financial Ombudsmen Service (FOS) or British Bankers Association (BBA)