Banks fleecing customers with overdraft fees

It has been revealed in a recent report that many of the UK’s banks are fleecing their customers with extortionate overdraft rates and fees despite the fact that many of the customers, as taxpayers, have a stake in the banks because of the bailouts that occurred during the credit crisis, which were funded by taxpayers’ money from the public purse.

Last month these overdraft rates are said to have hit a new high, coming in at an average of 19.1 percent. This is despite the fact that the base interest rate still stands at a record low of just 0.5 percent, which is where it has stood for the past eighteen months. The margin between the base rate and the rates that banks are charging on overdrafts is now astonishingly wide, and many of the most cash strapped customers are being hit with the rocketing overdraft charges.

Natwest and the Royal Bank of Scotland are said to be amongst the worst offenders, and these are both part of the RBS Group, in which taxpayers have a massive 84 percent stake. The average rate of interest charged on overdrafts was a massive thirty eight times more than the base interest rate, which means that banks are making a huge profit from customers that fall into the red.

An official from the Independent Banking Advisory Service said: ‘Banks have been allowed to increase their margins despite the bank rates being so low. There is no incentive for them to do otherwise. The level of profiteering is completely out of control. Nothing about it is fair or reasonable. We face reduced incomes and increase household bills and yet again the banks are compounding our misery. We bailed them out but they have no qualms about making matters worse in our hour of need. The Government should introduce a cap on the rates. But instead it protects the banks at our cost.’

Tags: fee, overdraft fees, high, crisis, bank, Bank charge, interest rate, overdraft

Overdraft interest charges hit highest level in ten years

Since the catastrophic global credit crisis swept across the UK, leaving the banking industry to face huge losses, the UK’s banks have been taking whatever steps necessary to try and recoup the massive losses, which were made worse by the recession, which left many borrowers unable to continue with repayments on loans, credit cards, and other forms of finance.

Reports have highlighted the various ways in which banks have been trying to claw back their financial losses and shore up their own finances, including reducing the interest paid on savings accounts to little or even nothing in some cases, and sneakily increasing the interest rates charged on loans and other forms of credit.

Another recent report claims that the interest rates being charged on current account overdrafts have now been hiked up to their highest level ten years, with the average rate of interest being charged on accounts that are in the red increasing to 14.22 percent.

The report states highlighted that this was twenty eight times higher than the base interest rate, which is at an all time low of just 0.5 percent, where it has been since March of last year. It also stated that the base interest rate was a massive 6 percent last time average overdraft interest rates exceeded 14 percent. Officials believe that this is yet another move by banks to try and make more money from customers and improve their own profits.

An official from the financial industry group Moneyfacts stated: “Despite eventually winning the OFT case banks made significant changes to the level of charges they will levy for unauthorised borrowing. As one revenue stream closed inevitably they have moved to find another. Banks are likely to be making more now from these increases than they ever were from penalty charges.”

Tags: finance, overdraft, interest, bank, Bank charge

Thousand leave Halifax over bank charge changes

It is reported that around seventy thousand customers have left the High Street banking giant Halifax amidst anger over changes to the way it charges for overdraft facility usage. There is also speculation that customers of the bank are still leaving, which means that eventually the changes may have cost the banking giant in excess of 100,000 customers. Many customers are said to have moved to rival banks, with many others trying to open new current accounts with an alternative bank so that they can leave Halifax. Read more

Tags: overdraft, Bank charge, Banking in the United Kingdom, fee, Office of Fair Trading v Abbey National plc, halifax

Millions of RBS customers to benefit from bank charge cuts

Starting from next month around twelve and a half million RBS current account holders are set to benefit from bank charge cuts, with the bank announcing that it is going to be cutting charges on millions of accounts. Read more

Tags: Bank charge, bank fees, rbs bank charges, cut, account holders, Banking, money

Appeals Court throws out bank charges appeal

Since the start of 2008 the High Court has been dealing with a battle between the Office of Fair Trading and the UK’s banking industry over the controversial issue of bank charges for unauthorised overdraft use, returned direct debits, and bounced cheques. Read more

Tags: appeals court, Bank charge, bank charges appeal, year, decision

Keep claiming those bank charges

Customers should continue to trying to claim back unauthorised overdraft charges from their banks despite a recent court ruling.

Birmingham County Court found in favour of Lloyds TSB in a case against Kevin Berwick in which he was trying to claim back £2,545 in charges.

The case does not affect other rulings as County Courts cannot set precedents, however, the fear is that banks will become more confident in turning down people who seek compensation.

Despite this, Which? says that people should not be put off from claiming and should remain confident that they will get some money back.

“This news must not deter people from reclaiming their bank charges,” said Emma Bandey, personal finance campaigner at Which?

“People shouldn’t be scared or worried about continuing with their claim or indeed starting one. We have now had over 387,000 downloads of template letters from the Which? website.

“It’s such a simple process. Keep reclaiming those charges and if you experience any problems, go to the Financial Ombudsman Service,” she added.

Some industry figures have warned that we could be about to see the end of free banking as banks look to recover the money lost through charges.

Tags: Economy of the United Kingdom, Lloyds Banking Group, court, Bank charge, Business Finance, fear, Financial services, business

64% of Brits won’t reclaim bank charges

Despite headlines that Brits can reclaim bank charges, many are failing to do so for fear for being rejected by their bank or having their accounts closed.

Many consumer struggle with banking charges which mean a penalty is put upon on those who spend more than their overdraft limit and many people are now due a refund.

But a survey by Which? shows that up to 64 per cent of Britons are delaying approaching their banks.

Over one-fifth told the consumer group that they had not written to their bank or asked them about the fees because they “fear how their bank would react”.

Emma Bandey, Which? personal finance campaigner, said: “It can’t be good for the banks’ image that so many people found them less than helpful.”

Recent figures show that 85 per cent of those who have launched a claim against their banks have been successful in reclaiming at least a part of their fee.

Those banks which are most feared in terms of reprisals such as closing bank accounts are said to be Nationwide, HSBC, Alliance & Leciester and Abbey.

Tags: Brits won't reclaim, Brits, headlines, bank charges, Bank charge, image, fee.Those banks, helpful."Recent figures

Bank charge row

The British Bankers’ Association (BBA) has hit out angrily in retaliation to a Which? magazine report that claimed banks are trying to trick their customers.

The publication looked into bank charges and found that many banks are employing “underhand methods” to prevent consumers challenging the charges.

According to the report, those who attempt to challenge the banks can be threatened with account closure and having their details passed onto debt collectors.

“In an attempt to avoid paying consumers what they are due, we have found banks employing increasingly underhand methods,” said Doug Taylor from Which?

“It is important that the exposure of these tricks does not put people off reclaiming their charges, though, as that would be playing into the banks’ hands.”

In response to the claims made by Which?, BBA has launched a scathing counter attack, labelling the report “sensationalist” and “personally insulting”.

BBA says that it is perfectly reasonable for a bank to close a customer’s account when it is clear that the relationship has broken down.

Additionally, the organisation points out that a bank is acting within its rights if it chooses to use a debt collector if it has chased an individual a number of times.

“Which? is clearly trying to exploit its position as a consumer body by sensationalising what could be a useful piece of research,” said Angela Knight from BBA.

“The way in which Which? has approached this is not only sensationalist, it’s also personally insulting to the front line bank staff who do an excellent job serving their customers.”

Another report into bank charges, carried out by the Office of Fair Trading, is due to be published soon.

Tags: bank, Bank charge, british, banks, office of fair trading, relationship, research