Bank to simplify overdraft fees
Competition among current account providers has been stepped up as a major bank announced new measures to simplify overdraft fees which will save its customers an estimated £14 million collectively in 2014.
Barclays will introduce a "one per day" cap on its £8 paid and unpaid transaction fees in the coming weeks, which it said will help customers save around £7 million this year. Currently, these fees can be charged up to five times a day at a total of £40.%VIRTUAL-SkimlinksPromo%
Customers are charged an unpaid transaction fee when a transaction is returned unpaid because there is not enough money in the customer's account. Customers can be charged a paid transaction fee in cases where a payment is guaranteed and Barclays makes the payment, but it results in the customer breaching a personal limit on their account.
Barclays has also introduced new text alerts in recent days that customers can sign up to, which help them avoid being caught out by charges. The texts will warn them that they can actively avoid a fee if they are able to pay cleared funds in. Customers are expected to save a further £7 million this year through this measure.
The bank, which has 12 million current account customers in the UK, estimates that, in total, its customers will save around £34 million this year from some changes it made last year as well as those it plans for 2014 to help customers stop themselves being tripped up by unexpected charges.
The move comes at a time when current account providers have been working to improve their deals following the introduction of new rules in September which made it easier for consumers to ditch their old bank or building society and switch to a new one.
The new rules have cut the length of time it takes to switch providers from up to 30 working days previously to just seven and outgoing and incoming payments are now automatically switched over.
Lloyds Bank recently introduced a cashback scheme which sees 1,000 current account customers being randomly selected each week to have the cost of a purchase worth up to £500 refunded.
Earlier this week, Barclays' chief executive Antony Jenkins, who took over the reins of Barclays in August in the wake of the Libor scandal and who was guest-editing BBC Radio 4's Today programme, said it could take up to a decade for the bank to regain customer trust.
Mr Jenkins said: "Trust is a very easy thing to lose, and a very hard thing to win back.
"In my view it will take several years - probably five to 10 - to rebuild trust in Barclays."