Do you know how much you’d pay if you went into an unauthorised overdraft? A simple mistake could set you back over £20 in charges – hardly fair when customers usually rectify these oversights quickly.
Not to brag or anything, but I’m pretty good with money. I know what goes in and out each month, reluctantly save for boring things like home repairs, and I’ve never ever gone into my unauthorised overdraft.
Until last week, that is. A direct debit that comes in on the same day each month inexplicably arrived a day late, so my mortgage and two of my bills (also coming out on direct debits) put me £400 into the red.
The cost of a small mistake
Swift panic ensued, and I realised that, having never done this before, I had absolutely no idea how much it would cost me – £5? £10? £100? I was horrified when I realised I’d be racking up charges not just for the original mistake, but for each direct debit that left my account after that.
I have two current accounts, both of which charge a daily rate for going into an unauthorised overdraft. One account (the one that went into overdraft) charges £5 per day, but if I happen to have any other direct debits going out on the same day, they’ll charge £25 extra for each.
That leaves me £55 out of pocket. Ouch.
Changes in bank charges
Over the past 18 months, many banks have changed their charging structures and introduced daily charges when you go over your limit. Initially this seemed like a good idea – it’s much more straightforward and people (in theory) will know how much each mistake could cost them. But for many people, unauthorised overdrafts will cost a lot more than the previous system.
After the massive taxpayer bailout, I don’t think it’s fair that banks can charge such ridiculous rates for what amounts, in many cases, to an oversight which can be quickly rectified. Plus, the banks make a huge amount of money from these charges – in 2009, they made £2.5 billion.
Can we force banks to be fair?
When the coalition agreement was drawn up, the new government promised to ‘introduce stronger consumer protections, including measures to end unfair bank and financial transaction charges.’ But sadly this hasn’t happened yet.
The only way we can force the banks to reduce their unfair charges is to push the government to stick to this promise and change the law. If you want to join us in this, you can email your MP and ask them to support our campaign – the more support we get, the more they’ll listen to us.
How much does your bank charge for an unauthorised overdraft – and have you ever been caught out in the same way as me? Tell us your stories below – we’ll pass them on and make sure that consumers’ voices aren’t drowned out by the banks lobbying to avoid reform.