A couple of our readers have been asking us to put a post up on finance and some of the ways in which we the public are conned. So here goes.
Tens of thousands of people have a current account and thousands have had enough of the banks treating us like mugs.
Because that is actually the problem. The bankers think we are too stupid to notice the strokes they pull and/are too bone idle to get off our backsides and do something if we catch them with their hands in our pockets. And,do you know what? they have made a vast amount of money out of us over the years because they have been absolutely right.
Not any more. The war between the banks and their customers over illegal and unfair charges has exposed not only the extent to which customers have been taken for a ride but how keen people are to get their own back. Here are just five of the reasons why you should switch accounts when you are unhappy with the service you are getting.
CURRENT ACCOUNT CON 1 YOUR OVERDRAFT.
How much interest are you paying on your overdraft? if you don’t know and you are regularly overdrawn you should check out the table below. With introductory offers on credit cards lending money at 0% and the leading current accounts lending it for as little as 5.9% why should you fork out 18% for the dubious priviledge of an overdraft.
BANK ACCOUNT TYPICAL OVERDRAFT AER
NATWEST CURRENT PLUS 18.86%
LlOYDS TSB CLASSIC 18.7%
BARCLAYS STANDARD 15.6%
HSBC BANK ACCOUNT 18.3%
ALLIANCE AN LEICESTER PREMIER DIRECT 5.9%[0% IN THE FIRST YEAR]
Running a £1000 overdraft on a Nat West Current Plus Account and switching it to Alliance and Leicester’s Premier Direct Account would save you in the first year £188 and £129 each year after that [assuming the overdraft rates remain the same] It’s a no brainer.
CURRENT ACCOUNT CON 2 LOW CREDIT INTEREST
If you spend most of the month in credit then you won’t have to worry about your overdraft interest rate. But you should consider the rate of interest paid on your credit balance. Here again the high street names tend to come up short.
BANK ACCOUNT CREDIT INTEREST AER
NATWEST CURRENT PLUS 0.1%
LLOYDS TSB CLASSIC 0.1%
BARCLAYS STANDARD 0.1%
HSBC ACCOUNT 0.1%
ALLIANCE AND LEICESTER PREMIER DIRECT 6.1%
CURRENT ACCOUNT CON 3 ILLEGAL CHARGES
Thousands of people have been reclaiming penalty charges levied on their accounts over the last six years following judgements by the OFT that charges must reflect the actual costs of administering a unauthorised transaction and notifying the customer.
The best way to avoid these charges in the first place is to arrange an overdraft when you fear you may go overdrawn and/or reduce your spending. If you have a reasonable relationship with your bank you should also be able to get charges waived without too much trouble.
That said the banks know full well how their penalty charges trigger rapidly increasing debts after very small over spends-and they have been happy to take your money all these years. So if you have been put through the wringer by the penalty charge debt spiral go ahead and claim your charges back. Set up an alternative bank account first though,as the bank may close your account if you proceed with a claim against them
CURRENT ACCOUNT CON 4 THE CHEQUE CLEARING SWINDLE.
Isn’t it amazing that in this day and age that money paid into your account by cheque should have to clear for day’s on end. We alledgedly put a man on the moon in1969 but now in 2007 it still takes up to six days to properly CLEAR money paid into an account through the CENTRAL CLEARING SYSTEM, farcical. The only way round this is to make and receive as many payments electronically as possible-even then they can take two days to clear.
BANK CHEQUE PAYMENTS TO CLEAR
NATWEST THREE TO FIVE WORKING DAYS
LLOYDS TSB THREE TO FOUR WORKING DAYS
BARCLAYS THREE TO SIX WORKING DAYS
HSBC THREE TO FIVE WORKING DAYS
ALLIANCE AND LEICESTER FOUR TO SIX WORKING DAYS
CURRENT ACCOUNT CON 5 FEE PAYING ACCOUNTS
ALL THE BANKS OFFER PACKAGED ACCOUNTS THAT CHARGE A MONTHLY FEE.You get offered a free range or discounted benifits in exchange for your hard cash. The banks are good at claiming that these benifits are worth a fortune but if you look at them carefully most of them are of little value to most people.
Still for some people these accounts mat be worthwhile,not though for many of the 150,000 Citibank customers who were recently switched from the free Sterling current account to a fee-charging account without being consulted about it. Citibank requires them to opt out if they want to continue to receive a monthly fee- free bank account. Many customers were not pleased.
The only way consumers will get the upper hand over these organisations is if we actively seek out the best deals and complain when we don’t get the level of service we are entitled to. That dosen’t mean it will serve your interests to fall out with your bank unnecessarily but it does mean that you should make sure you are not getting ripped off.