Among the list of very hot topics in Great Britain today is all about bank charges troubles.  The banks are currently collecting bank charges on their clients in an estimated amount of 5 billion pounds yearly.  If you don’t have an arranged overdraft facility and you go beyond the limit, or if you breach your agreed overdraft limit, you’re using the banks which they describe as an unauthorized overdraft facility and bank charges are being charged to bank customers.  One out of four people have used an unauthorized overdraft in 2007.

The banks argued that an unauthorized overdraft is a facility that has not been arranged in advance so they are entitled to charge a fee for this service which we consider bank charges fees.  The fact is, that the banks have been charging the people for several years, under different names, which simple represent penalty charges to the customers.  The banking institutions terms and conditions declare that a charge shall be made if you break the terms of the arrangement like going overdrawn.

With the banks still operating a 3 day clearing system, this means that no we operate in a fast paced society of direct debits and standing orders, internet payments and buy now ?pay later schemes which allow financial institutions to get ample possibility to take in billions of pounds from bank charges fees.

Maybe some of us are wondering why the banks in today’s world cannot operate a day of two or same day clearance system.  The purpose is bank clients could have ample opportunity to understand our finances simpler and they can lose in two respects.  They could lose interest on these payments and also the opportunity for people to dip into an unauthorized overdraft.

The banks have three arguments and these are we are recovering our costs, we use these bank charges to provide free banking to everyone, these are fees for a service our clients have requested.  All these three arguments are fault.  The truth is that banks never expected a bank customers?uprising on this bank charges issue.  The uprising started by the internet and those that were not contented and chose to come together and hit the banks together.  They were systematically drained of these bank charges as well as other service fees by clients getting a refund. 

Banking institutions need to only impose bank charges that are reflected and are in proportion with their actual costs of rectifying the breach of contract.  Contract Law in the UK states that a breach of contract should only be put right with the losing party recovering their liquidated loses.  A report by a Professor of Banking has estimated this cost between 2.50 pounds to 4.50 pounds bank charges and a few way off the average of 35 pounds.

 

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Filed under: Personal Finance

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