Here's the rub, though. That figure is authorised as long as "regular payments" are being made into the account. If I ever have an overdraft of any amount that's unauthorised, then I'm going to get charged £5 a day. That's £150 per month, or £1800 per year.
So, just say I were to lose my job, so I wouldn't have a regular income. Knowing the competence of the Department of Work and Pensions as well as I do, it would take them weeks on end to sort out Job Seekers' Allowance during which time I'd still have to pay the gas bill, the mortgage, the Council Tax and feed and clothe my daughter, her hamster and her rabbits. Not that the pets weear clothes, of course, I'm not Paris Hilton, but you get the idea.
Even if I managed to keep our heads above water, I might still forget some once a year direct debit was going to come off and somehow find myself in overdraft. Presumably because I no longer had a regular amount comng in, it would be unauthorised, and they'd start banging on £5 per day in charges. That's £35 out of a weekly Job Seekers Allowance of around £65. The bank takes the charges ever month regardless so you can see how losing more than half your income is going to lead to incurring more charges and so the spiral of despair continues. You can plead financial hardship, but they don't have to waive the charges and they will continue to accumulate putting you more and more in financial disaster with no way out while you go through the tortuous procedure of complaining to the Financial Services Ombudsman. Even then, your case is not guaranteed to succeed.
Don't think many years of loyal and financially prudent custom will help you either - I know many instances of where banks have been extremely unhelpful when people have lost their jobs. These, by the way, are the banks you and I own after we bailed them out and who are still paying a fortune in bonuses to their top employees. Any Government with a backbone would have made sure that they kept the banks that they owned on a fairly tight leash and broke them up so that small business and household customers money would be safe, like the Almighty Vince suggests. But, no.
Nor has the Government done anything to change the law so that banks can't take the mickey out of their customers with excessive bank charges. You are not telling me it costs them anything like £5 per day to service an overdraft. This is taking advantage of people when they are at their most vulnerable and is simply appalling.
Nick Clegg and the Liberal Democrats do have a fair amount of backbone, though. Look at what he said:
“A Liberal Democrat government will legislate to ensure that no bank can charge its customers unfairly for going over their limit or bouncing a cheque.
“Banks should, of course, be able to pass on the costs they incur in dealing with these problems.
“But they should not be able to profiteer from customers making small mistakes. We will outlaw unfair charges from now on.
“Bank bosses should look to their consciences and give back the money they took from their customers in unfair charges..
Again the Liberal Democrats show that they understand the issues ordinary people are facing and will take action to deal with them.
If Labour suddenly say "oh, we would do the same" well, the obvious question is "oh yeah, so why didn't you these last 13 years?".
And as for the Tories, well, are they going to tell their banking friends what to do? I won't hold my breath on that one.
Other policies unveiled by the Liberal Democrats today include a cap on interest rates charged by credit cards and store cards, and real terms cuts in rail fares.
If, by the way, you are caught in a cycle of escalating bank charges from which you can't escape, have a look at Martin Lewis' Money Saving Expert site and do what he says. It won't cost you anything but might help in the long run.
2 comments:
No disrespect intended, Caron, but I'd challenge your view that the Lib Dems have a lot of backbone.
Last week the party published its review of options for replacing Trident nuclear weapons. At a time when deep cuts in public spending are on the table, and Obama is leading the world towards disarmament, you'd think the last thing we need is to spend £97 billion on new nukes.
Unfortunately the party did not have the courage to recognise an opportunity where the UK could take a global lead in arms control by stating that we won't replace Trident. Instead, we had statement that there would be no 'like for like' replacement, and instead a mish mash of half measures and compromises based around retaining nuclear weapons. This looks like the classic middle-of-the road fudge that many voters associate with the Lib Dems.
I would have expected no more from the Tories or Labour, but it's a shame to see such lack of vision from the Lib Dems. :-(
Have you ever asked the reason for overdraft? but banks in U.K have always created people to panic!
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