How To Avoid Bank Charges
Bank charges are all the charges and fee made by a bank to their customers, related to personal current accounts or checking account. Such charges can take many forms such as monthly charges for providing an account, charges for certain transactions, interest in respect of overdrafts and charges for exceeding authorised payments or overdraft limits. If you use your bank account and cards carefully, you might have to pay nothing. But if you go over your authorised overdraft limit or withdraw money more than what you have got in your account, you will quickly rack up high charges. In this article we give you an overview of such charges and how you can avoid them.
An overdraft is where you are allowed to take out more money than what you actually have in your account. It is a way of borrowing money from the bank that is linked to your current account. For this service bank will charge you a fee or interest till the time you stay overdrawn. Such overdraft fee can accumulate very quickly. Therefore, try to agree on an overdraft in advance, otherwise it will cost you exorbitantly. When your overdraft limit is unauthorised, you will be charged for all the cash withdrawal, cheque or card payment you make. The fee can be anywhere from £10 to £25 for each transaction.
Charges For Refused Direct Debits And Standing Orders
If there is a Direct Debit or standing order due to be paid but you do not have enough cash in your account to cover it, the bank can charge you and refuse to make the payment. Every time your payment is refused, you will be charged as much as £25. Most of all the current accounts charge refused payments, while some may charge a monthly fee instead. You can utilise Direct Debit reminder app to make sure you do not get taken by such surprise payment and avoid rejected payments and penalties.
Monthly Maximum Charges
Make sure you check what the Monthly Maximum Charge (MMC) is with your current account. This will help you to know how much overdraft is costing you. All current accounts now have a MMC in place. It is the maximum amount that you have to pay each month in fees, charges and interest on unarranged overdrafts. The amount may vary depending on which current account you have.
Usually, taking out cash from the cash machine using a debit card is free in the UK. However, there are some exceptions. If the cash machine is inside small shops, on garage forecourts and in nightclubs, they may charge up to £5 each time you use the machine to withdraw money. Such charges will be displayed on the screen so that you can decide whether you want to go ahead with the withdrawal or not. Another instance when you will be charged ATM fee is when you use a credit card to take out cash. You will not just have to pay a fee but interest as well that will be applicable from the date you withdraw the money. There are several other prepaid cards that will also charge you a fee to withdraw money from cash point machines.
Same-Day Bank Transfer Fees
Same-day bank transfer facility using the Faster Payment Service (FPS) is usually free of charges. But if you want to transfer a very large amount within a day then you may have to pay a fee. Most banks may charge you £25 to £30 for such service.
You will get to know all about the fee charged by a bank when you open an account. If you have any problem with the fees and charges or if you think the bank has got it wrong and has charged you wrongly then talk to your bank and you can also ask them to waive the charge.