RBS and NatWest, part of the RBS group in which the taxpayer has a 84% stake, is overhauling its bank charges. The fees that will be affected by the move are those paid by customers who exceed their overdraft limits, or go overdrawn without their bank’s permission.
From 1st Febuary 2011, the maintenance charge, paid referral fee and guaranteed card payment fee currently applicable to ‘unauthorised overdrafts’ will be replaced with a single daily unarranged overdraft fee of £6. Customers will be charged the fee for every day they are overdrawn by £6 or more without their bank’s permission.
RBS and NatWest say they will also scrap interest on unarranged overdrafts.
The unpaid item fee overdrawn customers face will increase from £5 capped at £50 a month, to £6 capped at £60 a month. This applies if the bank chooses to release funds for transactions, standing orders or direct debits that push an individual into an unarranged overdraft.
Susie Wands, head of overdrafts, said: ‘we asked our customers about products and charges and they told us they wanted them to be simple and easy to understand’.
Overdraft alert Service
The changes also include plans to introduce text and email alerts which will alert customers who have signed up for the service if their account is about to incur a fee.
The Which? verdict on RBS and NatWest’s new bank charges
The new charges will prove cheaper for some customers – especially those who only dip into an unarranged overdraft only occasionally and for short periods of time. For example: someone who makes a payment which takes them into an unarranged overdraft, makes a further payment while overdrawn and is in the red for two days in a row during the month currently pays £50 plus interest. Under the new charges, they’d pay just £12.
But someone who is overdrawn for 21 days a month and who makes 12 payments while they are overdrawn will pay £126 when the new charges take effect, compared to £110 now. Meanwhile, someone who is continuously overdrawn could pay £180 a month when the new fee structure is adopted – which could, in some cases, be more than they currently pay.
James Daley, Editor of Which? Money, said: ‘It’s encouraging to see RBS has introduced a new service which should help customers avoid slipping over their overdraft limit in the first place.
However, the difficulty for anyone who is looking for a new bank account today is that almost every bank has an entirely different way of charging for their overdrafts – making it almost impossible to compare which accounts are best for your circumstances. We want the industry to work together to help customers compare the different accounts and charges, so that they can easily work out which one is most suitable for their needs.
In the meantime, we’d advise people to check the fees and charges very carefully before signing up to a new bank account, and check that they represent good value for their circumstances.’
You can find out which bank accounts our experts researchers, and our members, rate by visiting the Current accounts review, which features good deals for people whose accounts are normally in credit and those who are often overdrawn.
Which? Money when you need it
You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.
Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.
Or for money-saving tips, and news of how what’s going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast
For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.