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If you’re experiencing difficult debts, confusing credit cards or inscrutable ISAs, then our economics expert is here to help. Why not write to OurExpert@CreditChoices.co.uk
Andy Williams is our Online Savings Expert at CreditChoices.co.uk and can assist with all monetary matters no matter how big or small, from piggy banks to re-mortgaging and beyond.
Our expert says...
This is a question that a number of people have been asking of their banks and building societies over the last 24 months or so.
If the office of fair trading (OFT) action against the seven banks and one building society in question is successful, and it is proven that these bank charges are illegal, then you will be entitled to a refund of these charges in part or in whole (it’s too early to estimate the magnitude of these refunds).
However, and this is a major however, the outcome of this preliminary test case is not expected until March. Additionally, it’s anticipated that whoever is defeated will contest the decision and appeal, which could delay any kind of closure on this matter until 2009.
Also, be aware of two things:
(1) The banks have assembled a legal dream team to fight this case, and…..
(2) If the banks lose then they will have to find new ways to recoup profits. In essence, the days of ‘free banking’ will be well and truly over.
So the answer to your question is ‘not right now, but perhaps in the future’. There are other avenues available to you though which might ease your finances slightly.
Your bank, Lloyds TSB, is one of the harshest penalisers for account mishandling. If you’re forced to use an unplanned overdraft at any point during a monthly billing period, Lloyds charge a flat rate fee of £15. The real sting though is that they charge you an extra £6 a day if you borrow up to £25, an extra £15 a day if you borrow between £25 and £100, and a whopping £20 a day if you borrow over £100. During the monthly period, Lloyds will charge you a maximum ten daily fees. If your balance shows that you’ve borrowed more than £100 for ten days (including weekends and bank holidays), then you're likely to face charges of £215 in total.
The actual cost to banks is estimated to be around £2.50 per charge.
The Premier current account from the Alliance and Leicester www.alliance-leicester.co.uk (who are not among the banks taken to court by the OFT) currently offers a 0% EAR overdraft, where no interest or usage fees are applied to agreed overdrafts for the first 12 months. After 12 months, the 0% overdraft continues but a usage fee of 50p a day (£5 max per month) applies if your agreed overdraft is used.
This account might help you find your financial feet.
