Everyone’s financial circumstances are different. The way we budget, manage our income and service our debts; all based on a diverse range of criteria, founded on our personal priorities. When we talk about personal finance, that’s what we mean. That’s why a “one size fits all” approach simply doesn’t work when looking to solve the Great British public’s debt problems. After all, each individual’s route into debt will have been based on a range of pressures and a different set of circumstances. Even the most common of credit streams, the overdraft, can be used in a variety of ways to suit your specific needs. Again, people use their current accounts in their own way, to suit their income. So, banks should apply any overdraft charges in a way that suits this individualised use of the service. Sadly though, this isn’t the case.
The charges imposed for inadvertently breaching your overdraft limit can be intensely frustrating and an argument has recently arisen over your banks power to halt any payments that would push you over your limit. In a recent survey by a leading UK consumer group, it was found that almost half of us would like to see banks ‘bounce’ payments that would take you over your arranged overdraft limit. Only 38% of those surveyed said they’d prefer that their bank honour such a payment and charge them accordingly. These findings were prompted by a Supreme Court ruling that unauthorised overdraft charges did not fall under the jurisdiction of the Office of Fair Trading.
This highlights two very different attitudes to what is, essentially, another form of credit. As a current account holder who goes over their overdraft limit, you are effectively being lent money without asking for it and then being charged an excessive amount for the service. Breaching your overdraft limit to any extent can incur fees of £35 or more but the actual cost to your bank for providing this service could be as low as £2.50. Therefore, these charges are generating an estimated £2.6bn of revenue for banks each year. The answer would appear to be offering this service only to customers who ask for it, allowing others to view their overdraft limit as just that. This is not without its difficulties though. Cheque payments which have been guaranteed with a bank card must be honoured. There is also the view that halting these payments could lead to more severe financial difficulty later. If, for example, you have direct debits set up to cover the cost of your utility bills and your bank was to ‘bounce’ one of these payments, the company could take legal action.
The range of financial circumstances facing British consumers is vast and varied. Even as a relatively small piece of the wider credit puzzle, an unauthorised overdraft can have serious implications on your personal finances. If you are feeling the pressure of mounting debt of any type, it’s important to get specialist debt advice to help you find the solution best suited to your circumstances. Harrington Brooks are one of the longest established and most trusted financial institutions in the UK. Their dedicated team of debt advisors can help you with all aspects of your debt problem and assist you in finding the right solution. Visit their website and try the free Harrington Brooks debt wizard for a quick and easy insight into the debt solution that’s best for you.
Related posts:
