/ Money

What charges are lurking behind your bank account?

We think the concept of ‘free’ banking in the UK is a myth as we’re often stung with charges we’re not expecting. Hidden, unfair or excessive, the banks can have a  habit of sneaking in additional costs.

When my student days came to an end it took me several months to find a permanent job. I had temporary work which kept me going, but without a regular income I ended up being hit with regular bank charges.

My bank gave me a small emergency overdraft to use, but due to my irregular income, I ended up staying in the overdraft for nearly a year. I was being charged £22 every five days I was using the facility. And when I exceeded the limit I would be hit with an £8 charge for each transaction. Often it was the £22 fee that caused me to exceed the limit. Naturally the situation soon spiralled out of control and I ended up several hundred pounds in debt.

Charges for bank admin tasks

And I know I’m not alone. My colleagues have been sharing their experiences with me. Jennifer Davis told me:

‘Mine and my partner’s joint bank account went over the agreed overdraft by approx £13 and we were charged £50 for it. As soon as we noticed (two days later) we put more money in the account – it was just an accident. I was shocked by the charges and they wouldn’t let us off.’

And Judi was charged a fee for amending her direct debits to keep her out of her overdraft:

‘My current bank account (which I have had for 35 years) was going overdrawn every month by a large amount because my salary was going in after my largest payments had gone out. I asked my bank to change the date of the outgoing payment. They made the change but charged me £120 directly out of my account to do it – a lot of money for a small admin task!’

Handy banking texts notify me

I soon took my business elsewhere, and the bank I am with now automatically apply a £6 buffer in the event of overdrafts being exceeded. As long as I do not exceed the extra £6, I am never charged, and if I do, I am only charged £6 per day (and I receive a text to notify me I have gone over). This has only happened once, but overall I feel much more satisfied that this bank is charging me fairly and doing their bit to ensure I don’t get stung.

Here at Which? we often hear about unfair and hidden banking charges. I’m creating a dossier on unfair charges so we’ve a record to present to politicians. We want to ensure discussions relating to the Financial Services Bill stay on track so we end up with a financial watchdog we can count on to ensure we’re being treated fairly.

In order to show the decision makers that unfair bank charges are an issue, I am looking to get more testimonies to add to our dossier. Have you got an example you’d be happy to share?

Craig Donaldson says:
10 July 2012

A few years back I got a charge for going over my overdraft by a few pence.I ended up getting a £60 charge and also a £30 charge at the end of the month. I was out of work at the time so I found it hard to pay it back. They would give me a charge when I was already over my limit which ended up resulting in another charge. This went on for quite a while as I struggled to pay it all back.
I contacted the bank and spoke to the manager and told him about the situation and I got no help whatsoever, I just got told there is nothing he can do and to make sure I have enough money in my account to stop the charges continuing over to next month which i couldn’t do at the time because of my situation.
This went on for a few months with a £30 charge each month with a £60-£80 charge on top of that. I think altogether since I have had my account I must have paid them around £700 in charges!

Craig Donaldson says:
11 July 2012

I am still with the bank, i started working and ever since then i have just been very careful about going over my limit.
Te bank have changed the way their charges work since then so its a bit better.

I see a lot of companies offering to reclaim bank charges, would you say it’s a good idea to check them out?

Lisa Ter-Berg says:
11 July 2012

Went into my nearest branch and changed my bank account details in person with an advisor I was assured that all direct debits and standing orders would go out of my new account and that any company approaching my account would be diverted to the new account. I would not of minded but it was just a old account closed and new account opened in same bank. It turned out that was not the case and was charged by the company taking the DD £15 and then £8 from the bank, I spoke to customer services and they then refunded the charges Phew.

Well…… First Direct is very up front with charges – Free current account if in credit though no interest paid. Savings accounts are clear on interest paid. The reason I left Midland Bank 20 years ago was because I saw a “sundries” charge two or three times of around £7 on my monthly bank statement – I asked what it was for and not given an answer but it was refunded without question – This was why I transferred to First Direct.

Xenia says:
13 July 2012

I had someone carry out a fraudulent transaction on my HSBC account last year which totally cleared me out. I was a student at the time so £450 just disappearing meant I couldn’t pay rent or bills for a month. However, HSBC agreed initially to refund the money to me pending investigation.

A few months passed, and I got a letter claiming that in fact I had carried out this mystery transaction (which I managed to later track myself by doing what HSBC should have done and ringing up the website through which the money was transferred – it was in Germany). So, they took the £450 back out again leaving me overdrawn on an account which does not have an overdraft.

So I rang the police and opened an investigation. Meanwhile, HSBC had decided to start charging interest on the overdrawn account. I absolutely refused to pay the money back, so they got debt collectors and all sorts onto me. I still refused and instead got the financial Ombudsman involved. It was only then that I discovered that in fact HSBC have closed my account without actually informing me, but are still trying to charge me for this transaction. I’m waiting for them to respond to the Ombudsman, but I will never have an account with them again.

Consumers Fedn Kenya says:
17 July 2012

It is not in UK alone. In Kenya, East Africa the challenge of hidden costs is too common. The regulator, Central Bank is either unwilling or has no capacity to rein in on the nearly 100 per cent uncompetitive banks. We are keen to lean from Which.co.uk on hoe you are dealing with this challengeh: Consumers Federation of Kenya (www.cofek.co.ke or @consumerskenya on twitter) is hosting the inaugural Consumers Dialogue Forum -1 on bank interest rates. Thanks

John says:
21 July 2012

My problem was with an HSBC small business account. Back in January I was closing down the company after 2 disastrous years of recession meant I had no option but to cease trading, and mis-timing of a £10 cheque to companies house applying to strike the company off resulted in a small overdraft, wihch was rectified within 48 hours. I wrote to HSBC twice by recorded delivery, clearly explaining the situation and asking them to cancel all further direct debits, standing orders and block any further debit transactions pending closing the account. They responded by applying £120 in charges for the overdraft and no reply. I phoned them, made an appointment and went to see the local branch business account manager, who was very understanding – agreeing that in the circumstances the charges were disproportionate and said it would all be sorted out, and I would get a call from someone in a different department in due course.

Well, it seems that “contacted” meant my wife and I being bombarded with calls from random people in overseas call centres demanding repayment of the overdraft *they* created, some of these calls went on for an hour as it was explained to them again and again that the company had ceased trading and no funds were available to pay in to the account which should have been closed. Each one seemed not to have read the file and has to have the entire story spelled out to them. One agreed that the conversation was going in circles before giving up.

As a twist to the tale, an unexpected tax refund was paid into the account last month, putting it back into credit by a small amount. HSBC responded by debiting further overdraft charges of another £120, thus rendering it over £100 in the red – again! So not including interest, they have now applied a total of £240 in charges for a £10 overdraft for 48 hours.

I am now waiting for the next barrage of demands.

Tom says:
31 July 2012

I was pretty angry with a situation I found myself in this time last year. I paid off a credit card in full at the bank in the last few days of June, unaware that the direct debit for the same amount had already been issued. Subsequently on the 1st of the month double the payment came out of my account putting me into my overdraft. Fortunately I was able to transfer funds putting me back into the black ver shortly. However, I was annoyed to discover that as I went into my overdraft at 11:59pm on the 30th of June and that overdraft carried on to the 1st July, I was charged the £5 fixed overdraft usage fee twice(!), once for each month, plus the interest for the two days. Had this happned mid-month I nwould have only been charged the £5 once. As most payments go out at the beginning of the month I expect this happens all the time.

solar says:
21 August 2012

How about this for a hidden charge! My ISA with Santander was tucked away by me for a rainy day or as a retirement present for my wife. I never needed to draw on it so come my wife’s retirement I decided to draw it out only to be told it was now a dormant account and couldn’t be traced. After loads of expensive telephone calls and numerous visits to the bank (armed with every single pay-in receipt) I eventually told them that If I couldn’t have my money plus interest within 1 week I would report the matter to the ombudsman and also send full details to the MoneyMail. Suddenly they found it and added lost interest.
If I hadn’t been “on the ball” and kept careful records I wonder if I would still be without it. I also wonder if my experience is unique ……….I very much doubt it……. How many other people would have kept comprehensive records?
I think very little publicity would be given to similar cases and I don’t think this sort of occurance is limited to any one bank. As far as I can see the only possible winners could be the banks if so what incentive is there to prevent such things happening.
I wouldn’t be at all surprised if there is a not a substantial annual income to the banks caused by this sort of thing

Halifax Bank. I put a large cheque into my Halifax account, when it had cleared i asked to electronically transfer half of it to my TSB account(TSB & Halifax are in the same group) i was asked to show proof of identity. I had my Halifax card-not good enough. TSB card-not good enough. My signature(the one they accepted to access my account)-not good enough. I could on the other hand pay £25 at the customer help desk to transfer it. I could pay £10 to get a bankers draft. After having words with a supervisory robot type who just said-‘rules is rules’ i wrote a cheque to myself and put it into my TSB account. It took 7 days to clear but it was worth it. I no longer bank with Halifax. What has changed over the years? they are sneakier.

James says:
22 December 2012

Unfortunately it’s not their fault, it’s eu money laundering rulez. These do nothing to stop real bad guys but does cause a lot of annoyance to legitimate people like you, as you have discovered.


I am currently a student and struggling to make ends meet, both my parents are disabled so cant help me out financially, I am with Santander bank.
Because I am struggling to make ends meet I cant seem to get out of my £100 overdraft. Each month I am charged £20 for being in a Free overdraft, which I cant understand. I have asked them on several occasions if they can help me out, but no luck there. I asked about the charge as well and they said I agreed to it, in which case I did not agree to any charge, being a free £100 overdraft. I was also told the charge is an admin fee, to give the best service they need to charge people extra money.
What help can I get there, and can they actually do that? especially when I’m a student…..

Many thanks.

Darren says:
29 October 2012

Hi I have a standerd bank account with rbs with no overdraft but it let me overdraw by 10pounds . When I noticed that had happend i paid the 10pound into the account the next few day . When i look at my account the next week i was charged 20 pounds then again for the next four months then the next month it was 180 then 174 then 30 then again 174 pounds then 204 pounds i refuse to pay it because i paid the 10pounds in do aye have to pay it all back I have even had debt collector at me

K M Nield says:
23 November 2012

I get daily mini statements to check when money comes out of my bank.What I have noticed {after being charged £25.00 a time } Is that when I have used my card to pay for something it shows on my mini that it is pending and taken off my balance,only to reappear as money available.Knowing that money willl be going in the next day I have then spent a little of it,only to get a mini the next day showing that the money had actually been taken out the day before, apparently after 6pm even though the banks were closed.Making me overdrawn and being charged the usual £25.00.This is so frustrating when this happens .As sometimes it is only a couple of pounds overdrawn and I feel that it is the banks fault for putting money back into an account that they know needs to come out .I use my card a lot and when money is going in and out like a yoyo then it is very easy to become a few pounds overdrawn .I think this particular bank does this purposefully.

Craig says:
10 December 2012

i bank with Halifax
ive gone overdrawn last month thought i paid off the full amount the next month i get a bill
saying im overdrawn i go check my online banking it only shows one amount taken from my account no details what for?
i went into the bank to be told when you get a letter its already a month old ???
i had to ask in the bank how much i needed to pay to stop the overdraft fees
whats the point of sending a letter a month late and online banking if charges aint shown?
keeping you up to date……

Marie says:
11 December 2012

I am at present having difficulty with RBS over charges coming out of my account mid month, which are taking me over my overdraught. Thereby making sure I am charged again the following month. At the time it is taken out, there is no chance of me topping it up within my overdraught limit, therfore i am being charged £6 a day untill my wages are deposited.

There is no point in asking them to waiver the fee and i have asked them to change the date of withdrawing the charges, but they are of little help. It seems it is gonna be quite a while before i am gonna get out of this mess, but it makes me so angry that their withdrawlsare the cause of my £100 monthly charges.

Surely there could be some sort of timeline, say 3 months, that if you continuously go over the arranged overdraught, THEN they begin to charge you. It would only take one month for me and I would be sorted.

frontrow says:
21 December 2012

Myself and my partner bought our first house nearly four years ago. We opened a current account with Halifax to help us budget the household bills. After a few months we then opened an account with our mortgage provider and stopped putting money in the account and all our direct debits were cancelled in effect making this a dorment account.
Now admittedly we never used to pay a lot of attention to our finances back then but we didn’t realise we were still being charged the account fee every month which put us into into our overdraft for which we were then charged £1 a day for the pleasure. Our overdraft was only £100 so it wasn’t long before we went over our limit and the charges went up to £5 a day.
Around a year later my wages took a big hit and we struggled to pay and my partner thought we’d miscalculated how much we had paid and withdrew around £50 more than we should have and we missed the repayment but eventually our luck changed and we managed to clear the balance.
We thought that was the end of it. We then got more letters saying we owed them hundreds more pounds. Again we set up a repayment plan and have been told this has now come to an end and we still owe over £400.
Neither my wife or I are very good at complaining and neither can profess to be particularly savvy with money but surely this must be disproportionate to how much we money we had that we shouldn’t of? We have been charged at least £2000 over three years for an account we haven’t even used in that time.

James says:
22 December 2012

Citibank: awful.

Issued a cheque to clear a credit card bill, and set up online internal transfer from deposit to current to cover this. They bounced the cheque, charging me 25 quid for that, not to mention the fact that the credit card company also hit me as a result. Their rationale was that the cheque cleared on a bank holiday. Apparently they are able to transact cheques on bank holidays but not internal transfers.

Over £100 in fees now, I referred it to the ombudsman, who are still waiting on citibank. Ironically, I had a call from a company doing a survey for citibank on quality of customer service a couple of weeks ago, it took me some time to fully convey my exasperation, but they recorded it all.

My wife went overdrawn by £3.44 earlier this month. The first she knew about it was a letter from the bank. The bank charges are £25 per day. By the time my wife received the letter she had lost £50. She phoned the bank to get it sorted but the only suggestion was to pay the overdrawn amount ASAP. She was unable to get to the bank as she was at work during opening hours. This happened just before she was due to be paid. Between being overdrawn and having her wages go in was five days, this cost her £125. A quick calculation shows that she has been charged an AER of approx. 2600%. The govt. are looking into the rates charged by pay day loan companies, they need to re-look at bank charges. My wife has not been overdrawn in over 12 years and has been loyal to this bank for over 15 years. She has been refused even the most basic overdraft, a £10 overdraft would have prevented this problem. Losing this money will certainly put her overdrawn next month and could take ages to recover from. The annoying thing about this whole situation was that she had a tenner in her purse!
It is my view that the banks are using these OTT charges to bolster their funds rather than just covering their costs. Surely this practice needs to be outlawed. There is no way that these charges can be justified.

It’s disgraceful.

It’s no wonder than many keep too much money in current accounts, earning no interest.