Which? banking survey exposes the high costs of UK current accounts
The consumer organisation Which? has found UK bank customers are hit with a triple whammy of poor credit interest rates, expensive overdrafts and costly overseas transactions.
Although many customers believe they are benefiting from free banking, research by Which? into the real cost of current accounts has uncovered a system where charging methods are deceptively complex, making it virtually impossible for consumers to compare costs.
The study found that while most current accounts do not charge a monthly free, high overdraft charges combined with low credit interest mean consumers end up paying more than they bargained for.
The biggest confusion concerned overdrafts, where many disparities were found between accounts.
The annual cost of an authorised overdraft of £200 for six days a month indirectly takes £185 out of your account at First Trust, whereas the same amount at Coventry BS is not subject to charges.
The cost of unauthorised overdrafts was even higher.
Santander was the most expensive for a regular unauthorised overdraft where the account holder goes overdrawn through payment of two direct debits each month, incurring costs of £95 a month or £1,140 over a year. The second most expensive bank for the same unauthorised overdraft was Clydesdale/Yorkshire Bank, which charged £950 over the year, while the Co-operative Bank was the cheapest, costing £51 over the year.
But even customers who stay out of the red do not get off scot free.
One overseas trip a year can set you back as much as £57 simply by using your direct debit card to make two £100 withdrawals and two £50 direct card payments if you bank with Norwich & Peterborough, while Lloyds TSB and Ulster Bank charge £56.
Which? said that while current accounts offer free facilities such as machine withdrawals and direct debits, low interest rates all but negate the positive effects of these benefits.
As current account costs are not levied upfront, customers do not feel the need to hunt around for better deals and changing accounts is seen as an inconvenience.
The organisation looked at 29 current accounts and found 14 do not offer credit interest and few match or beat the bank base rate of 0.5%. Which? based its calculations on the cost of in-credit banking, a four-day break overseas and credit interest on a balance of £1,500.
September 9, 2010
Tags: banks, borrowing, Interest Rates Posted in: Uncategorized
One Response
Loans Calculators » Which? banking survey exposes the high costs … Equity on me - September 9, 2010
[...] rest is here: Loans Calculators » Which? banking survey exposes the high costs … By admin | category: email software survey | tags: asset, balancing-risks, from-free, [...]
Leave a Reply