| Unauthorised overdraft fees. These are three | | | | Are Unauthorised Overdraft Fees Legal? |
| words that worry every bank customer. An | | | | |
| unauthorised overdraft fee is the fee charged | | | | There is some question as to the legality of |
| by a bank when customers go over their | | | | unauthorised overdraft charges. Penalty |
| overdraft limit. | | | | clauses (such as unauthorised overdraft |
| | | | charges) are illegal under breach of contract |
| These fees can be very steep, with some banks | | | | law. However, banks do have the right to |
| charging high premiums for customers who | | | | claim damages from customers who breach their |
| exceed an agreed overdraft limit by as little | | | | contract with the bank. To avoid going to |
| as a few pence. A recent consumer report | | | | court every time, most banks write these |
| suggests that bank customers paid more than | | | | charges into the contract. They are then able |
| £4 billion pounds in unauthorised | | | | to raise those charges at regular intervals. |
| overdraft fees in 2004. | | | | |
| | | | The banks see the unauthorised overdraft fee |
| Scale Of Overdraft Fees | | | | as a fee for services rather than a penalty. |
| | | | This could alter the legal position. |
| The BBC have reported that the seven major | | | | |
| banks charge unauthorised overdraft fees of | | | | In many cases, it is the people who can least |
| £25 to £38 pounds. Interest rates on | | | | afford it who suffer these overdraft charges. |
| the unauthorised amount can also be high. | | | | This can become a cycle, with some people |
| While some banks charge under 8% interest, | | | | having to pay unauthorised overdraft fees |
| others have interest rates that hover around | | | | month after month. |
| the 30% level. | | | | |
| | | | Help With Your Banking Rights |
| The banking industry has been slated for this | | | | |
| practice by customers who feel they have been | | | | Consumers who want to find out more about |
| treated unfairly. The Office For Fair Trading | | | | their banking rights should check information |
| has also criticised banks for overcharging | | | | from the Bank Action Group, a self-help |
| customers for unauthorised overdrafts. Late | | | | organisation for banking customers. This |
| payment fees for credit cards have also been | | | | organisation can guide consumers through the |
| criticised. The OFT suggests that late | | | | lengthy process of recovering unauthorised |
| payment fees for credit cards should be no | | | | overdraft fees from their bank. |
| more than £12 and should only cover the | | | | |
| administration fee. | | | | Many organisations say that the banks should |
| | | | make it easier for consumers to see what |
| Getting A Refund | | | | charges might be applied to their bank |
| | | | accounts. Until they do, consumers should |
| Consumers who feel they have been overcharged | | | | read the fine print as the terms and |
| by their banks may be able to receive a | | | | conditions of each bank account contain |
| refund if they go through a time consuming | | | | information about charge that might apply. |
| process. | | | | Finally, when banks send variations of terms, |
| | | | it is useful to read these to see what new |
| First of all, consumers can use the Data | | | | conditions might apply. |
| Protection Act to request details of all | | | | |
| charges on their account over the past six | | | | Joseph Kenny writes for the Loans Store which |
| years. Next, they need to inform the bank | | | | offers more information on home loans, |
| that they intend to sue in County Court to | | | | secured loans and other loan topics available |
| get this money refunded. | | | | on site. |
| | | | |