Overdrafts? More confusing than Ted Rogers' 321 questions

OverdraftOverdrafts are a nightmare. Once you get into the red, there's almost no way of working out how much it'll cost you. With that, consumer group Which?!?! have decided to put that line of thinking to the test and asked a group of volunteers – which included a maths PHD student – to calculate the charges of an unauthorised overdraft for four separate banks.

The research showed that only 7 out of 48 charges were correctly calculated.

Which!!!! chief executive, Peter Vicary-Smith, said: “Bank charges are too complex and impossible to compare.” It seems that overdrafts have a number of complex rules and additional fees, with Lloyds TSB coming in for particular criticism.

In simple terms, this could mean that you end up paying five times as much for going into the red than necessary. For example, going overdrawn for two days in a row would be charged £50 at the Nationwide building society, while the Halifax would charge just £10 for the same mistake. The highest current account unauthorised overdraft fee is £150 a month, thanks to First Direct and HSBC.

“Bank charges are still too high,” said Mr Vicary-Smith. “The regulator must be a strong, open and proactive watchdog that stands up to the banks, not a lapdog.


  • Mike H.
    There is a simple answer. DON'T GO INTO YOUR FUCKING OVERDRAFT!!!!!!!!!!
  • Sicknote
    @Mike, a very sensible comment there. But your forgetting that without stupid people we'd be knee deep in shit and have no one to serve fast food.
  • Dan
    Quite right Mike. That said, these banks have incredibly intelligent systems. They know your balance at any time. It should be impossible to have an unauthorised overdraft. By virtue of them allowing to spend money you don't have, they're authorising it. They should just decline cards to stop it happening. But then they'd not make a fucking killing preying on the weak / desperate.
  • Rob
    In my view it is as bad as looting.
  • Roger S.
    I got rid of my overdraft at the end of 2010, it was a mighty pain in the backside at first but I budgeted and after a few months I was better off anyway. If it should happen to come in conversation people are often bemused as to why I don't have one and "how I get through the month" - simple, I make sure I budget properly. It's as simple as using an Excel spreadsheet to keep everything in line (I also cross-reference using a handwritten budget) and all in all it probably takes about 15 minutes a month at most - and it means I'm giving the banks as little of my hard earned money as possible. I don't see how people haven't realised by now that the banks will never change and will always "nickle and dime" you for any and everything they can. Since I've made these small changes that took hardly any time to implement at all, it means my money is my money (aside from rent, bills etc) and I am in complete control. Whereas three years ago I was living month to month paying overdraft charges, credit card bills every month and wondering - "hmm, where is all my money going?" - now I know exactly. Toodlepip lads!
  • SgtMunky
    @Rob, I'd say it is very similar to looting It's like kicking a man when he is down, even if you only go overdraft by a couple of quid, you an incur a huge charge. If I had my way, my transaction would just get declined, instead of the bank authorising my card to go into overdraft, incurring an 'unauthorised overdraft charge'.
  • The b.
    If you are living on or close to an overdraft every month, you are living beyond your means, simple as that. I've had a free overdraft facility of £350 on my account for the last 15 years and not once have I come close to using it. I certainly didn't have a six figure salary in 1997. This means - no holidays, no fags, no no nights out clubbing, driving performance cars that you can't afford to run, insure, tax, mot, etc etc, until you have the means to support that sort of lifestyle. It should be obvious, I know.
  • tiderium
    oh to be as wonderful and self righteous as some!! imagine if you will working for a company that pays you weekly on minimum wage and you unfortunately end up off sick with say meningitis, that then has a detrimental effect on the amount of money going into your bank account and you miss a direct debit by 23p you then get charged £35 for that, and as your still on ssp its hard to make that back so you get hit with yet another charge the next month and so it continues in a vicous circle. So before people start shouting the odds about dont go over your overdraft think about it first, and yes the meningitis thing is real and was me and was off work 6 months so you can see how that can balls up your finances and do the banks listen or care nope
  • Mick t.
    "There is a simple answer. DON’T GO INTO YOUR FUCKING OVERDRAFT!!!!!!!!!!" Yeah, because the unexpected never happens does it!
  • Idi A.
    I went into overdraft because of a screw-up by the bank (RBS). But try pointing this out and asking for the fees to be reimbursed and they just point you in the direction of the terms and conditions. Hanging's too good for the fuckers.
  • Winterfell G.
    I used to be in my overdraft like you... then I took an arrow to the knee
  • ja
    I stay in my overdraft as my savings account pays more than the interest costs.
  • snigface
    you know that black horse on the Lloyds TSB sign? It's Black Bess. I tried to make sense of my bank charges a few weeks ago due to an almighty flamingo up (it's like a cock-up, only much larger) by student finance and I was trying to work out exactly how much they needed to refund me. It took me longer to do that than it did number crunching for my dissertation. F£$% the 1%.
  • Dick
    I think they should block purchases when it would take you into a negative balance. They could install flashing sirens in shops to go off when someone tries to go over what they can spend. For internet purchases, it could automatically update your facebook page to say you nearly went overdrawn, and no-one should lend you any cash. For direct debits and standing orders, they should charge a fairer £5 per missed payment, but try again the next week (and charge you again if you miss it). More than a month behind, you get cut off.
  • Kevin
    Take responsibility for your actions. If you NEVER want to go into an overdraft then don't open yourself up to the opportunity by having one.

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