What Is Your Bank Charging You? A Guide To Bank Charges

When you’re shopping around for a  bank  account there are a lot of factors to consider. Many people go for up-front incentives, such as money paid into the  bank  account, vouchers or a gift. However, it is worth looking at  bank  accounts in more depth to find out what you might be paying for various transactions. Here are some of the transactions that  banks  might charge you for.

Authorised Overdraft

An overdraft is like a short term loan. The  bank  gives you permission to spend more than the funds you have in your account. This amount is usually fixed in consultation with the  bank  and may be reviewed at stated periods. Some  banks  have a free authorised overdraft up to a certain limit and charge for any balance over that limit. This is the best way to arrange an overdraft.

Unauthorised Overdraft

When customers spend more than they have in their accounts without arranging an overdraft limit, this is known as an unauthorised overdraft.  Banks  penalise customers heavily for this by charging an unauthorised overdraft fee of more than £35 in some cases. The excess spending will also be charged interest at a higher rate than normal.

Cheque Services

Some  banks  charge for clearing cheques more quickly than the standard period (this can range from three to seven days depending on the  banks  involved and the day of the week). There may also be fees for processing cheques in a foreign currency.

Taking Money Out

Sometimes customers need to set up direct debits, where companies take certain sums from a  bank  account each month. They may also wish to set up standing orders, where they arrange to pay a certain amount to another  bank  account or company each month. Some  banks  charge a setup fee for these services. . It is also worth looking at the daily withdrawal limit on a current account. This can vary widely depending on the  bank  you choose.

Other  Bank  Charges

 Banks  may also charge for other services such as:

1. setting up a loan facility

2. changing or issuing foreign currency

3. writing cheques that exceed the cleared balance in an account

4. stopping a lost cheque

 Banks  will also charge customers if they have to write to them about an infraction of  bank  rules, such as exceeding the overdraft limit or defaulting on loan repayments. This means that defaulting customers have to repay the debt as well as the additional charges.

Doing some research could save consumers a small fortune in  bank  charges. In addition for looking for incentives, consumers should look for  banks  that keep their charges as low as possible. With a bit of digging, it is easy to find  banks  with:

5. an automatic overdraft limit for which there is no charge

6. free standing orders and direct debits

7. free transfers between  banks 

8. low unauthorised overdraft fees

9. low charges for other  bank  transactions

Choosing a  bank  that fits this profile will help with overall financial health.

Source by Joseph Kenny

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What Is Your Bank Charging You? A Guide To Bank Charges