A series of scandals and scams combined with the catastrophic crash of the economy brought the banking system to its knees in recent times. Many people have become utterly disillusioned with their bank; years’ worth of trust having been completely destroyed. With most of us not only wary of our banks but also seeking any ways we can save ourselves some pennies, we need to know how banks really make their money from us.
People who exceed the limits of their overdraft are charged by the bank. Breaking over the boundary is failing to meet the terms of an agreement, so perhaps at first being fined may seem acceptable. It seems less so however when charges made are completely disproportionate to the value of the offence. Someone may stray only ever so slightly over their limit for a few days but face a bill in the hundreds. Even those with an overdraft protection account can still face a fee if they transfer money to cover the deficit.
Poor Interest Rates
People with current accounts are also suffering. It was reported by The Daily Mail that someone with a running balance of £1500 in their account will lose out on £48 every year because interest rates have fallen so low.
Credit and Debit Cards
Paying for items in certain ways often results in a surcharge and credit cards are included in this. Deeming the ability to pay for something in this manner a luxury, banks will charge a sometimes hefty amount. It was only recently that inactivity charges were removed from credit cards after that, finally, was deemed too harsh.
Debit cards can face similar problems. When used to make purchases abroad, consumers will return home to find a bill awaiting them, stating the amount they now owe to their bank. Some cash withdrawal machines will also charge you a fee when using your card to take money out of your own account.
Payment Protection Insurance (PPI) was mis-sold to millions of people. It accompanies borrowed money for loans etc. as a type of insurance to support the continuing of payments, should the consumer become unable to work. However, outrage ensued when news broke that most people with PPI had not agreed to buy it and many of the policies were poorly detailed or unsuitable to the person receiving them. Many people have made successful claims for reimbursement but the saga seems far from over and continues to ramble on.
Lack of Clarity
Many people often fall victim to hidden charges because the way details are outlined to consumers is too hazy and unclear. According to research conducted by Which? 6 out of 10 people feel they have been unfairly charged by their bank while 90% want bank fees to be made far clearer and easier to understand. As with many things, a lack of knowledge on the issue is often the problem.
Out of Date Information
If you change address but do not inform you bank, when they attempt to send you a letter but have it returned to them, some will land you with a fee for not keeping them informed on your current details.
Not only does using a debit card abroad often result in a fee from the bank but any purchases made in a foreign currency must be converted into the currency handled by your bank. In some cases, they will charge you to carry out this conversion.
Account Closing Fees
Banks can even charge you a fee if you decide to close your account with them entirely. Said to be required so it is possible for them to finalise any outstanding transactions and keep a record of your details, these charges may seem unnecessary but they are made nonetheless.
With so many different ways that banks can take money from their consumers, it is reassuring to know that the Financial Ombudsmen Service will help people who have been unfairly treated to claim their money back free of charge and with the likes of PPI; organisations exist with the simple aim of getting people the compensation they deserve.