UK Banks WIN Bank Charges Case

[Cabbit]

Got to say bank charges really only affect people that can't afford them, everyone that works over £12.5k has the ability to get a overdraft. The ones effected by this are those that don't earn enough or are on benefits and can't afford these charges.

Its literally in my opinion the poorest that are out of pocket by bank charges.

 

[Abstract]

Wirelessly posted (iPhone: Mozilla/5.0 (iPhone; U; CPU iPhone OS 3_1_2 like Mac OS X; en-us) AppleWebKit/528.18 (KHTML, like Gecko) Version/4.0 Mobile/7D11 Safari/528.16)

Thirty quid is a lot of money to pay for what may be a small mistake.


I have overdrafted 3 times, and all because of a single auto-payment error that I failed to notice within 3 days. My online bank transactions only update every 24 hours or so, and it's much worse on weekends.


I know that the mistake wasn't the bank's fault, but $120 a

penalty is a bit harsh for one mistake that I couldn't have been aware of immediately anyway. Also, I wouldn't have complained if the fine was what I feel is within reason. However, it was not reasonable.

 

[AppleMatt]

but from skimming it, sounds like AppleMatt is spot on.

Thanks . I'm liking your avatar at the moment.

Perfectly sums it up.

Also thanks

I recently closed my account with a shall we say rather popular bank and moved to another highstreet bank…

The carcrash that happened with the debit orders was astonishing.
The "unpaid direct debit charges" and then pelion on ossa — the interest — the bank piled up was truly outrageous… on a dormant account.

Exactly the same happened to me, they sent me a list of all direct debits to be moved. I signed and returned it. Few weeks on I had the mobile phone and broadband ringing me saying they'd restrict my service, and when I checked they'd only shifted 5 of them. The charges and interest had reached a few hundred, and as ringing them didn't work it took writing two letters to get them to cancel it (on the second one a chap rang up and just said 'I can see what's happened, terribly sorry, we'll refund everything').

AppleMatt

 

[RedTomato]

I'm with Applematt. What people are missing is that these charges are hitting the poorest the hardest. Poor people are more likely to have to buy items on rental, on hire-purchase, and so on.

Rich people, or people in jobs are less likely to buy things on rental - they buy them outright. The rental agreements they do have are likely to be better structured, with more room for flexibility, as these people are able to take their money elsewhere, and are better informed and better educated.

These charges really do snowball, especially on an account with not much coming in.

Suppose you have £20 in your account. You get charged varying things each month for things like land line, and mobile phone bills which can be different every month. (this would be before PAYG existed). You're away for a week, and a debit for £25 comes in.

Now you're -5, and get slapped with £30+ overdraft fee by the bank, taking it to -35. You don't know about this, you haven't been informed yet.

On returning, you have a vague memory that you have a bill coming in, and put in another £20 to cover the bill, making (according to you) £40 in the account, which should be enough to cover the £25 charge, leaving £15. Nope. Your account balance is actually -15.

Now another bill comes in, maybe not for much, £10. You believe you have enough to cover it. You get slapped yet again for another £30+charge, leaving you with a balance of -55. Plus further charges for every letter to you.

This is similar to what actually happened to me as a student. The sums might be tiny to you, but they mean a lot to the people involved.

Poor people are a massive money-making machine for the banks. They're far more profitable than rich people, and there's more of them. I got charged far more in a week than I pay for a year's banking now that I have a job.

 

[dmr727]

I understand that it's the responsibility of the account holder to maintain a positive balance, but having debit cards that, by default, allow a charge that'll overdraw the account is a flat out douchy thing to do. Not only that, but I have to actually write my bank a physical letter to get that changed.

I'm not one of the people that this sort of thing affects, but underhanded business practices like this make me want to kick my cat.

 

[0098386]

People who can afford it will be okay still. Something about the rich getting richer and the poor getting poorer, rich people are generally okay with that.

I got overdrawn once as a student. I forgot exactly what happened but I had about £25 in one account and bought something at £27 after recieving a letter than my student loan had been deposited. Well it was later that day. I rang up my bank (Halifax) and they dropped the charge. But that was about 5 years ago, I imagine they're a bit more strict on these matters now.

 

[Moof1904]

What about when overdraft isn't overdraft?

There have been numerous cases of banks (mine at one time included) making sure to always process withdrawals in a given day before they process deposits for that day, thus making sure an account holder's balance is as low as possible. They do this to drive up overdraft fees and also to penalize accounts that require a constant minimum balance.

I noticed this when I started watching my bank and every single time I make a deposit and a withdrawal in the same day, they processed the withdrawal first, no matter which came though the system first.

Be careful unilaterally supporting any fee unless you're absolutely sure that the mechanism in place to initiate the fee is trustworthy. With banks this is rarely the case.

 

[Rodimus Prime]

There have been numerous cases of banks (mine at one time included) making sure to always process withdrawals in a given day before they process deposits for that day, thus making sure an account holder's balance is as low as possible. They do this to drive up overdraft fees and also to penalize accounts that require a constant minimum balance.

I noticed this when I started watching my bank and every single time I make a deposit and a withdrawal in the same day, they processed the withdrawal first, no matter which came though the system first.

Be careful unilaterally supporting any fee unless you're absolutely sure that the mechanism in place to initiate the fee is trustworthy. With banks this is rarely the case.

you forgot about the other thing banks will do. They will take the things you buy and charge them to your account largest to smallest in hope of getting your multiple over draft charges. That and they will continue to let
over draft just to charge you more often.

I feel banks should get one over draft for when it first happens then the bank should lock the account from others on the debt card until more money is added. But the banks do not do it so they can nail some one with multiple over draft chargest

The other common way to get over drafted is when you get gas/Hotel/restaurants rooms. Those places will lock up more of the card for a few days until everything in is processed a few days later. For example a gas station might lock up a $100 your account for 3 days when you put your card in and then 3 days later the $30 for the tank of gas is process. The problem with this that banks will used that $100 lock up to charge you an over draft charge even though you never really over drew your account.

 

[BertyBoy]

It appears AppleMatt is the only poster so far to understand the original issue and the basis of the findings reported in the news.

Penalty charges cannot be unfair. This is the law. Or rather the law states that you cannot profit from penalty charges. Banks can write whatever terms and conditions they like into a bank account, they can't avoid the law.

The standard letter used by customers reclaiming their bank charges accuses the banks of unfair charges, and seeks to reclaim them. I can only recall one case, through a building society, where the customer was challenged in the local court. They lost that case.
But otherwise the banks have decided not to defend their actions. To put up a defence, and lose may not only set a precedent (for that bank), but would also leave them liable to charges of fraud - unlawfully removing funds from a customers account - it makes no difference whether it was a mistake or not.

Authorised overdrafts come with a set of obscene charges. This is seen as a fee, as the customer has arranged the overdraft. Unauthorised overdrafts incur penalty charges, and these must truly reflect the costs incurred. In most cases this should be nil. An automated letter should be pennies.

Back to the recent decision. As AppleMatt stated, it was just that the OFT cannot decide in a single ruling to settle all the (one million) outstanding cases. The banks have won nothing. The customers have won nothing, but they must pursue they local court cases as before.

I tell a lie. The big "win" for the banks is that if the OFT had decided in favour of the customers, they would have been obliged to refund, with interest, every single customer they had penalised in the preceding seven years, whether or not that customer had applied to have their charges returned.

I worked as a senior consultant for the bank that had the biggest fall from grace last year, in 2006-2007. I couldn't believe just how much the greed for these bank charges was prevalent throughout the whole management hierarchy. They absolutely believed it was their right to make charges like this for "financial services" like that. It upset them when I would point out "but it's against the law".
The bank loved them because it was "easy money".

 

[cantthinkofone]

F*ck banks.

I left US Bank after they screwed me over. I got three overdraft fees. They agreed to reverse one of them the next day. I said alright, i'll deposit money and cover the rest. Ok, ok.

Should have had a balance of 42 and some cents. I used my card for an $11 purchase, and bought a soda at a gas station the next day. On the third day i received a letter telling me i had received 6 over draft fees.

I looked online, and my account was negative over $200. I called and asked WTF was going on. They said they never received the reverse over draft fee, and that the transactions went thru. I said, well if i didn't have the money, because according to my check balance i should have a few bucks left, why did you let me spend the money?

Her exact words....

"Well we let you spend a certain amount before we shut your card off because you may need to pay a car payment, or mortgage payment."

My reply...

"Correct me if I'm wrong, but the average car payment probably runs about 250-600 a month. And a mortgage payment runs anywhere from 500-2000 a month. If i was going to spend that amount of money, don't you think i would know 110% that i was able to make the payment and not spend money i didn't have?"

"We treat every transaction the same no matter what size it is"

"So what if i went and spent 10k and then ran on you guys?"

"We would do our best to obtain those funds"

This went on for about an hour and i told her that US Bank could eat what ever fees that wanted to give me because i was not paying them.

The checking account manager is who told the rep on the phone when i first called, that she would reverse one of the fees. I told the lady on the phone that they had flat lied to my face more than once. One employee told me they called people if they were about to go over drawn. I said really? She said, yes that lady right there, as she pointed to a woman across the room. I scrolled thru my missed calls, and calls received for the last week and asked her if she recognized any of the numbers. I even offered to go get my phone records for the last two months. She didn't like that idea.


I eventually forced closed the account, once it got up to about $480. They sent me a letter saying they were willing to resolve the account for a lower sum if i went to their website. They offered me $380, i offered them $250, they declined, i offered $275, they declined again. So i said the hell with them.

Call me a fool, but i held up my end and they didn't hold up theirs. $37.50 is outrageous for a over draft fee. Considering, and i don't have a source, the average dollar amount that causes a overdraft fee is under $10. 26% interest loan. A loan you never signed up for.

They are giving you a loan so the transaction can go thru, and then charge you a flat fee for doing it.

 

[emt1]

^ US Bank is the most evil bank currently in existence. So far I have convinced at least 3 people to switch from US Bank to ING Direct.

 

[cantthinkofone]

^ US Bank is the most evil bank currently in existence. So far I have convinced at least 3 people to switch from US Bank to ING Direct.

I liked ING. I had them for a little while, but they didn't have a ATM or branch any where near me. I use a small town bank now.

 

[emt1]

I liked ING. I had them for a little while, but they didn't have a ATM or branch any where near me. I use a small town bank now.

I don't think they have ANY ATMs. You just have to use ATMs that have no fee. I never use ATMs anyways. Why use cash when you can use plastic?

ING has no branches. It's online. That's the point.

 

[star-fish]

everyone that works over £12.5k has the ability to get a overdraft.

You can also be a student and get an overdraft.

The ones effected by this are those that don't earn enough or are on benefits and can't afford these charges.

Its literally in my opinion the poorest that are out of pocket by bank charges.

No...it's the people that overspend (for whatever reason) and go into their overdrafts that are affected by bank charges, regardless of how much or little they earn. Everyone's out of pocket by bank charges.

Is it the bank's fault? Not as much as the person in question. Should they charge you £30 for going over your limit when their admin costs are £5? No, because then they are getting you into your overdraft with any excuse they can rather than pretending to 'help' you as they try to make out.

My personal way to avoid overspending is to have a main bank account that my salary goes into and my bills come out of. Then I have a £200 standing order from this account to another account, and I withdraw the £200 over the month and spend it on food, presents, clothes, going out etc...so I never go over. This is in addition to only having DDs go out of my account that are fixed, so if I randomly end up with utilities companies deciding to double my DDs randomly (which they have done in the past), I don't get screwed over and I only pay for what I've actually used.

 

[star-fish]

I never use ATMs anyways. Why use cash when you can use plastic?

Because not everywhere accepts plastic, including any of the shops near my work and home (small, locally run newsagents and sandwich shops).

Because some people need money for public transport.

Because it takes longer to pay with chip and pin than cash.

Because if someone steals £10 from your purse, pocket or wallet, then it's better than having them steal your whole bank account (or at best, you'd have no way to get money when you might need it).

Because all the 'card only' queues are longer.

Because a shop's card system might be down, or as happened to me the other week, the entire bank system might be down.

 

[RedTomato]

This is in addition to only having DDs go out of my account that are fixed

I didn't know you could have a fixed DD? I thought that was the point behind a DD, that it could be variable. Standing orders are the fixed amount payment method, afaik. And how do you deal with variable bills?

 

[Eraserhead]

Why use cash when you can use plastic?

Because then you can more easily keep track of your spending. If you withdraw £200 at a time (or whatever) then you just have to remember how often you use an ATM to know how much you've spent.

 

[robbieduncan]

Because then you can more easily keep track of your spending. If you withdraw £200 at a time (or whatever) then you just have to remember how often you use an ATM to know how much you've spent.

Indeed. Spending only using cash is a recognised method for controlling spending. It helps make it all seem more "real". For a lot of people spending on plastic is almost like not spending at all...

 

[cantthinkofone]

Indeed. Spending only using cash is a recognised method for controlling spending. It helps make it all seem more "real". For a lot of people spending on plastic is almost like not spending at all...

This is what i have started doing. I don't think i spend nearly as much as i used too. I could still spend less.

 

[star-fish]

I didn't know you could have a fixed DD? I thought that was the point behind a DD, that it could be variable. Standing orders are the fixed amount payment method, afaik. And how do you deal with variable bills?

Well, not 'fixed' as such, but things like Sky where I'll know what the price is for several months and it won't change unless I receive a letter. And I never go over my phone contact any more, and it's highly unlikely I ever would.

For things like gas and electricity, which are either variable or they try to screw you over by altering DDs with little/no warning half the time (in my experience), I pay online or in the post office using the debit card from my main account. That's easier for me anyway since I have housemates I need to split the money with.

I have to admit I'm in a lucky position though, because I have very little in the way of outgoings. My total bills are about £150/month, not including council tax, and my housemates' rent more than covers the mortgage interest, and they contribute towards some of the bills as well. Everything else is disposable income, but I'm careful and try to save money (from past experience), especially as we're in a recession. I do appreciate that there are lots of people out there who live from pay day to pay day, and not necessarily because they're frittering it away. Which is why I believe that banks should only charge to cover their admin costs in terms of overdrafts, if they let people exceed them.

Last weekend I went to open a current account with a bank, and they refused to let me unless I got a credit card and a savings account with them as well. Then they tried to make me put £2k in the savings account and take a £1500 limit on the credit card. This was all without even checking it was okay to look up my credit score. Not impressed.

 

[Rodimus Prime]

Well I will cut them some slack on some overdraft charges because I started looking at what my credit union charges for an overdraft charge. It charges $25 per item and it is not in it for a profit so it does have some cost put with it.

now the big difference is the the order everything is processed. Deposits go first and with draws will be processed in smallest to largest. They will try to ding you as few times as possible. They by default link up your savings/ checking to and will float things that way to help you advoid getting them.

As for check card I do not know if they would lock up the card as I have never test it but my gut tells me is they would lock down the card to avoid having a bunch of small charges dinging you for $25 bucks a pop.

To see how bad banks are in robbing there account holds is compare them to credit unions. Banks are in it for a profit and there investors are their first interested. Credit Unions first interested is to there account holders.

 

[BertyBoy]

This is in addition to only having DDs go out of my account that are fixed

DDs can be fixed or variable. They are fixed by default, and you tick and sign to agree to them being variable when you sign the mandate. I always check it, and if it's been marked by the retailer / company as variable when I expect it to be fixed, I don't sign.

Many, many years ago, when I had less money and agreed to buy on hire purchase, I ensured that the mandate was for a fixed amount. One year in, the retailer tried to up my monthly payments. My bank immediately cancelled the mandate, and I had an apologetic call from the retailer asking me to sign another mandate (for the original amount we agreed).