We are all for responsible banking. We want you to be able to make good choices with the money that you made. We don’t want to see it taken away from you for no reason. It’s your money; you earned it! We want you to be part of a healthier, fairer, banking system.
We’ve highlighted a few of the major offenders when it comes to needless charges and how you can avoid them!
Over Draft Fees
With most banks you can usually agree and overdraft limit. This means a set amount of money that you can take out of your bank account, even when your ‘real balance’ is £0.
Although it costs you less than an ‘unplanned overdraft’ (where you go overdrawn without an agreement with your bank), these are still expensive. Many banks will charge you a weekly or daily rate for every day your account is below 0. They will also charge you interest, usually to the tune of about 15-20%.
There is also the possibility that you will be charged for any unsuccessful direct debits that try to be taken out of your overdrawn account and are not successful.
They answer here is, obviously, try not to go overdrawn. And, if you do, try to replace the money as soon as possible so that your account is not under 0 for a protracted amount if time; thereby avoiding mounting daily overdraft fees. Fees add up quickly, so try not to leave your account overdrawn longer than you need to.
Some good ways to counter this happening are:
- Set a text alert. According to the FCA you are 24% less likely to go overdrawn if you use an app or text alert service. These days, most banks will allow you to set text alerts to notify you when your bank account reaches a certain level (ie. my alert is set for £50). This keeps you mindful and aware of exactly how much money you have left before you reach 0 and lets you tailor your spending before it’s too late.
- Look into alternative banks. Some banks will not charge you for going overdrawn. For example, ING Direct does not charge overdraft fees. Whilst most of the major high street banks might charge for overdraft fees, there are some mobile banks that do not. Look into switching your account to one of these banks.
- Live by your budget. If you have an app where you put in every transaction you make, then you are always aware of how much money you have left to spend in your bank.
Don’t let your bank take your hard earned cash!
Paying for your Account
Lots of banks charge you money just for the joy of having an account with them. Whilst this is pretty unheard of in the UK, it’s fairly common practise in the rest of the world (including the EU). Personally, I feel that paying just to have your bank account open is highway robbery.
Some banks will offer you extra services for a monthly fee, including phone or travel insurance, or car breakdown cover. Sometimes these can actually be quite good deals, so take your time to look through them and measure up the costs.
However, paying just to have an account is something that can easily be avoided:
- Do your research and switch to a bank that doesn’t charge you for your account. Many new mobile banks do not charge you for your account use, however I know that some people are hesistant to use relatively unknown banks. There are bigger, more established names that are international banks and who do not charge for accounts. For example, ING direct, or Santander.
Hopping across the pond for this statistic, but in 2015 America’s top 3 banks made $6 BILLION in ATM and overdraft fees alone.
This is disgusting.
Paying to withdraw your own money is another point that makes me particularly sore. There’s no need for it. If some banks do it and some banks don’t, it means that it is not a necessity payment. They are just deliberately finding ways to take your own money from you. Whilst this is not such a problem in the UK, as most ATM withdrawals are free, there are still things to look out for.
Ways to get out of this?
Do your research. Switch banks. Don’t let them take your own money from you. Lots of banks allow free withdrawals from other bank ATM’s, you just need to read up and be aware of which banks allow what.
Alternatively, you could always think ahead and make sure you only withdraw cash at your own bank’s ATM machines. Although to be perfectly honest with you, doesn’t sound so feasible to me.
Also watch out for overseas withdrawal costs. See what your bank offers you on this. My old bank was free to use in the UK at any ATM, but it cost me £1.50 for every withdrawal I made in Europe. Needless to say, by bank now does not charge me for any ATM withdrawals within the European Union, and I don’t have to pay any extra for the privilege.
If you want more tips on how to make savings in your everyday life, check out our post, 10 Everyday Savings Tips.