Bank Charges

Articles

Bank Charges

In recent years, there has been no little debate on the number and manner of bank charges imposed on their clients by the major banks. The problem has been exacerbated and hence come more into the public eye, because many people who have run into a situation where their account has incurred extra fees due to them entering into an unauthorized overdraft situation or failing to meet standing orders.

In each of these cases, the bank is fully authorized to apply charges and send letters to their customers requesting that they set their account back in order, and to charge them for the privilege. All these charges were explained in writing to every bank customer when they open an account, and they even signed their agreement to the terms.

So why complain afterwards that they didn't read the fine print. Having a bank account and keeping it in order is the responsibility of the client and not the bank. Most of the people who have bank accounts, current or saving have learned that it wise to keep them in order, and to keep track of any charges that were levied on the account. They are also entitled and not slow to complain about any charges that have been levied unfairly, and it the customer is in the right, the charges will be rapidly credited and an apology forthcoming (without charge).

Basically bank charges are pretty straightforward and realistic. Banks may or not lend money or handle credit card transactions, but that was never really intended to be the main stream of their business. Their main business is helping people to manage their money, and they are entitled to charge for this service. For every transaction that a customer makes the bank charges. The charges vary from bank to bank, but the law states on which services the banks are entitled to charge for. These are the prime examples:

Handling a cash deposit
Handling a cash withdrawal
Processing a cheque deposit
Issuing a daily, monthly or weekly bank statement
Issuing a cheque book
Providing online services
Administrating a current account
Administering a deposit account

These are the "bread and butter" services that a bank provides and which they are entitled by law to charge for. In an average bank account where transactions average around £1500 to £2000 every month, even with a small authorized overdraft and a bank loan to cover purchasing an average family car, bank charges should be no more than £50 a month, average interest charges around £75. Figures that are manageable for the average UK family.

Bank charges do begin to accumulate when an account begins to get out of control. Unauthorized overdrafts, especially without cover, are totally unacceptable to banks and the annual interest rate can being as high as 18%, along with high administration charges. Returning a cheque as well as a standing order can be costly, and administration charges high. Not only that, they are added to the overdraft and very rapidly the overdraft begins to amount to serious amount of money. Banks are completely entitled to apply these charges, yet they often are unfairly accused of taking advantage of their customers. A charge which is unfair.