I’m in one of those moods. The one where I’m beset by delusions of adequacy, I can’t work up the energy to pretend I like people, and every email is filled with doom and gloom and stories of bad behaviour.
Which brings me to today’s missive from the comparison site uSwitch. According to new research, consumers have been stung with more than £300 million in unarranged overdraft fees by banks which prevent them from opting out of this costly system.
I know, banks are (for the most part) upfront about charges for unauthorised overdrafts. But that doesn’t make the stats any less startling. Consider this: typically, consumers are charged £33 each time they overspend, but for 5 per cent of those affected the fees exceed £100, even though the average they were overdrawn was a mere £60.
In an attempt to recoup the fees, almost half of respondents said they called their bank to complain. While nearly two thirds were successful in obtaining a refund, nearly half of those who called their bank were told the fees would only be waived the once. Just a fifth of complainants were offered options such as balance reminders or text alerts to prevent them incurring further charges in the future.
But the most frustrating element of all this is lenders’ intransigence when it comes to helping customers. uSwitch says that more than a quarter of people who contacted their bank to deactivate their unarranged overdraft were told they couldn’t do so.
Tom Lyon, money expert at uSwitch.com, said: ‘Banks are raking in millions every year from unarranged overdrafts and failing to do everything they can to prevent customers from dipping deeper into the red.
‘Consent and, ultimately, control over finances needs to be in the hands of consumers. Yet, too many are in the dark about whether they can turn off their unarranged overdraft facility and avoid these extortionate fees. If consumers would rather have their card declined at the checkout than be stung by sky-high fees, they should be given the option to do so.
‘We urge banks to offer every customer the option to deactivate their unarranged overdraft. In the meantime, customers should contact their bank and set up text alerts for when their account balance is low, so they can take action before drifting into an unarranged overdraft. Overdraft costs vary widely between banks, so it also pays to compare all the options available to you and switch if you find a better deal.’
A switching site would say that but it makes a valid point. Lethargy is expensive. For example, the cost of slipping into an unarranged overdraft by more than £25 in a month on a classic Lloyds account is £80 once you’ve been over the limit for ten days, and there’s an additional £6 monthly overdraft usage fee. The same is true of a Bank of Scotland classic account and a TSB classic plus account. Other banks and building societies also levy hefty fees. If you are worried about drifting into the red, make sure you read your bank’s terms and conditions today.
Helen Nugent is Online Money Editor of The Spectator