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Creditfix LB 03-2017

Avoiding Unauthorised Bank Overdraft Charges

As previously reported the Financial Conduct Authority (FCA) is considering banning unauthorised overdraft fees. In the meantime, new rules from next month will mean that all banks have to cap fees.

Most banks have already introduced caps on fees, but fee caps can be as high as ?95 per month and overdraft fees can be very complicated and therefore difficult to compare from bank to bank.

The best practice is to try and avoid unauthorised overdraft fees altogether, so here are a few tips to help do just that.

Account Management

The most important thing to do is manage your account. If you often come close to your overdraft limit, check when payments are taken from your account. Changing the dates of some payments to after payday may help ensure that you do not exceed your limit.

Mobile Banking

Signing up to mobile phone banking can help you manage your account effectively. Text services can be set up to warn you if you are drawing close to your overdraft limit, so you can take appropriate action before it is too late.

Appeal Charges

If you exceed your arranged overdraft by mistake on the odd occasion many banks will be prepared to waive the charges, providing your account has been operated responsibly in the most part.

Extend your overdraft

If you are struggling to keep within your overdraft then speak to your bank about extending it.. Most banks will not charge a set-up fee for extending your overdraft, and it is certainly preferable to paying charges for unauthorised borrowing.

Switch Accounts

Depending on your overdraft needs, another bank may be a better option for you. Charges and overdraft criteria varies from bank to bank, so it is always worth comparing banks to see which is best for you. Providing you have managed your account properly you should have plenty of options to switch current accounts, and the new bank will normally do all the work for you.

Banks may be capping their fees for unauthorised overdrafts, but the charges can still mount up. Best to avoid them altogether if possible.

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