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Wednesday, 18 January 2012

Overdraft charges on current accounts are so complicated they baffle a maths PhD student

In case you live somewhere off the beaten track, you may not have noticed that British banks do their fair share of charging when it come to banking service, or in some cases, for services that are supposed to be done but in fact aren't! And now we hear that bank overdraft charges on current accounts are so complicated even a maths PhD student can’t always work them out, well, according consumer experts anyway.

A customer could be hit with a £150 bill for a large unauthorised overdraft without a clear explanation as to why, Which? said. The consumer body wants ministers to make banks provide honest and easily understood information about the true cost of going into the red. Or, as Jim Bowen used to say on Bulls Eye, "You don't get nowt for two in a  bed!"

Difficult: Consumer experts have found that bank overdraft charges on current accounts are so complicated even a maths PhD student can¿t always work them out 


Currently, the finance giants use a mix of daily and monthly charges combined with further fees linked to the number of cheques and payments that are bounced. Each bank has its own combination of charges with the result that customers cannot make meaningful comparisons to find which is cheapest.

Which? asked 12 people, including a maths PhD student, to work out the cost of an unauthorised overdraft for leading banks by giving them 48 mock bank statements on which the rules were set out.They got only seven out of 48 correct between them. The finance giants used for the study were RBS-NatWest, HSBC/First Direct, Lloyds, Barclays, Halifax, Nationwide and Santander.

The charges for the same small unauthorised overdraft could range from £10 to £50 depending on the bank, according to Which? The range on a medium overdraft was £44 to £125, while the figure on a large overdraft ran from £66 to £150. Which? said: ‘Overdraft charges may appear easy to compare, as banks charge either ‘‘simple’’ daily fees or interest on their main current accounts.

My pet hate is Barclays, but not because of it's charges. I keep an account with them and always have at least 20K in the account at any one time. I don't receive any interest on my money, so when I want something that's a little off the normal route e.g. to get a new card sent overseas or a statement, or a transaction that isn't in the official ledger, I get nothing, not even an explanation or an email. The same thing happens  when I use my card abroad. I have a ridiculous call that's made asking me for information about my mother's polo habit or my second cousin twice removed's poker strategy. In other words, nothing that has anything to do with security or banking and everything to do with pissing me off and not forcing them to give me what I want. 

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