It has been the biggest consumer rebellion for years as hundreds of thousands of us have battered banks to give back cash taken in fees for going into the red without permission.
Customers have pocketed more than £1 billion in refunds over the past six months alone with HSBC handing back £100 million and Lloyds TSB coughing up £36 million.
But it’s a confused picture with customers in the dark about going into the red and unclear what exactly they can and cannot claim. Just to add to the confusion banks have been taken to court and all claims are currently frozen until at least 2008 while the case is decided.
MoneyExpert.com explains how many of us are confused and shows how to work your way through the charges maze…
In the dark about being in the red
Research from MoneyExpert.com shows two-thirds of us don’t know how much we have to pay when we go overdrawn without permission.
Despite all the arguments and debate around 30 million of us admit to being completely in the dark about charges.
Even those who’ve successfully won back charges from their bank don’t know how the charges were worked out or how much they were due back.
Over a third of us think the interest rate for an unauthorised overdraft is around five per cent while around one in seven think the charge for going over the limit is £20.
How it really adds up
- Average unauthorised overdraft fees are around £28 and can go as high as £35.
- If you have an unauthorised overdraft the interest rate charged on it is likely to be around 25.62 per cent.
It is critical that you know exactly how much it costs if you are likely to exceed your overdraft limit because there are much cheaper ways of borrowing cash.
Agree your overdraft
Authorised overdrafts are around half the cost of unauthorised overdrafts at about 12 per cent, MoneyExpert.com research shows.
Personal loans can be as cheap as six per cent and also mean you will clear your debt and no longer be paying interest. With an unauthorised overdraft it is easy to run up huge charges which you don’t need to.
Don’t take it lying down
It’s important to remember that you can switch current account at any time if you are unhappy with the service you get. Check our current account switching service for a better deal.
How to move bank
- Look out for low overdraft fees. There are big savings to be made as rates can be as high as 18 per cent even if you’re overdraft is authorised. If it’s unauthorised rates can go to a shocking 29.9 per cent.
- Look at the charges you might face. Is there an annual fee?
- What about bonuses or cashback offers? Some banks will pay you to move bank so take advantage
- You can earn money on your current account. If you’re always in the black it makes sense to make as much money as possible. Rates go as high as six per cent but as low as 0.1 per cent
- Is it easy to get at your money? Does the bank have lots of ATMs or does it offer internet banking or phone banking?
- Tell your new bank you want to switch giving account details of your old bank
- Provide two forms of ID proving who you are and where you live
- And that should be it
How long will it take?
There are strict guidelines to make moving as easy as possible. Your old bank has three working day to pass info to the new bank including all direct debits and standing orders.
Your new bank then has 10 working days after your application is approved to open your account.
Compare current accounts today