We may not pay a monthly fee for ordinary current accounts in the UK but banking is certainly not free.
Low credit interest, high overdraft charges and big fees on spending abroad mean while we may not pay a monthly fee for ordinary current accounts, banking is not free.
New research from Which? reveals that consumers could be spending as much as £1,140 a year on unauthorised overdraft charges if they bank with Santander.
Disparity around charges doesn’t end there. While First Trust charges customers using its Classic Account £185 a year for using a £200 authorised overdraft six days a month, Lloyds TSB customers only pay £7.
It’s also very difficult for consumers to compare accounts as each bank has very different ways of charging for overdrafts.
Those in credit pay too
Even customers who stay out of the red are not getting a free ride from the banks. Based on a customer with an average current account balance of £1,500, and who makes one short trip overseas each year, Which? found that lost interest and fees for using their card abroad could be costing customers as much as £57 a year – and much more for those who travel overseas regularly.
Which? chief executive, Peter Vicary-Smith, says: ‘Contrary to popular belief, banking is not free. Whether it’s through low interest rates or high charges, we all end up paying for our current account in the end. The complicated way banks present charges makes it difficult for people to work out whether they’re getting a good deal. If you regularly go into the red or want a better return for your money, then the figures speak for themselves- it’s worth making the switch to a more suitable account’.
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