My bank phoned me 3 times last month to try to convince me to switch my Current Account to one of their new plans. They told me I could be earning £40 a month thanks to all the direct debits I have going out. It was only when I enquired about the new account’s interest rates, I realised I’d be charged considerably more for the arranged overdraft service, and that I’d earn no interest at all when my account is in credit. This made me wonder what else my bank charge more for than 3rd party companies do.
I told one of my friends about what I’d found out, and she told me she had used a short term loan company when she found herself short in January. To begin with, I was really shocked that she’d used one, and not just used her bank’s overdraft.
She explained that she didn’t have an arranged overdraft, and had used this company for quick loans before. She said they worked out much cheaper than the £6 per day her bank charged her for an unarranged overdraft. My friend said that she had borrowed £100 for a month, and paid £24 interest. That sounded like a lot to me, until she said that if she had been £100 in the red with her bank for 15 days, they’d have charged her £90 interest.
To be completely honest, I thought my friend had got her wires crossed with this fee, so I checked my Natwest Current Account’s terms and conditions. It says (and I quote) “If you go into an Unarranged Overdraft by more than £10, you’ll be charged an Unarranged Overdraft Usage Fee of £6 each day. The fee is capped at 15 fees per charging period (£90).”
It’s no wonder people end up in a mess! I am not for one second saying people should all run out and take out a payday loan, but if I ever find myself caught out with an unexpected bill, I’ll definitely look into them before I pay my bank £90 interest!
While writing this post, I noticed my bank’s credit card service is also much more expensive than my own. I would definitely advise people to shop around and look at all the options available to them before they take out an additional service with their bank. What do you think?