How banks work


Is Your Bank Overcharging You For Your Overdraft?

Unauthorised overdraft fees. These areAre Unauthorised Overdraft Fees Legal?
three words that worry every bankThere is some question as to the
customer. An unauthorised overdraft feelegality of unauthorised overdraft
is the fee charged by a bank whencharges. Penalty clauses (such as
customers go over their overdraft limit.unauthorised overdraft charges) are
These fees can be very steep, with someillegal under breach of contract law.
banks charging high premiums forHowever, banks do have the right to
customers who exceed an agreed overdraftclaim damages from customers who breach
limit by as little as a few pence. Atheir contract with the bank. To avoid
recent consumer report suggests thatgoing to court every time, most banks
bank customers paid more than £4write these charges into the contract.
billion pounds in unauthorised overdraftThey are then able to raise those
fees in 2004.charges at regular intervals.
Scale Of Overdraft FeesThe banks see the unauthorised overdraft
The BBC have reported that the sevenfee as a fee for services rather than a
major banks charge unauthorisedpenalty. This could alter the legal
overdraft fees of £25 to £38 pounds.position.
Interest rates on the unauthorisedIn many cases, it is the people who can
amount can also be high. While someleast afford it who suffer these
banks charge under 8% interest, othersoverdraft charges. This can become a
have interest rates that hover aroundcycle, with some people having to pay
the 30% level.unauthorised overdraft fees month after
The banking industry has been slated formonth.
this practice by customers who feel theyHelp With Your Banking Rights
have been treated unfairly. The OfficeConsumers who want to find out more
For Fair Trading has also criticisedabout their banking rights should check
banks for overcharging customers forinformation from the Bank Action Group,
unauthorised overdrafts. Late paymenta self-help organisation for banking
fees for credit cards have also beencustomers. This organisation can guide
criticised. The OFT suggests that lateconsumers through the lengthy process of
payment fees for credit cards should berecovering unauthorised overdraft fees
no more than £12 and should only coverfrom their bank.
the administration fee.Many organisations say that the banks
Getting A Refundshould make it easier for consumers to
Consumers who feel they have beensee what charges might be applied to
overcharged by their banks may be abletheir bank accounts. Until they do,
to receive a refund if they go through aconsumers should read the fine print as
time consuming process.the terms and conditions of each bank
First of all, consumers can use the Dataaccount contain information about charge
Protection Act to request details of allthat might apply. Finally, when banks
charges on their account over the pastsend variations of terms, it is useful
six years. Next, they need to inform theto read these to see what new conditions
bank that they intend to sue in Countymight apply.
Court to get this money refunded.



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