What would you call such a charge ?

Question

Is this legal Banking practice now ?

My Son who has never been over-drawn before managed to get over drawn slightly . The bank writes to in form him that he will now pay Interest of 12.9% PM on the dues Plus £15.00 for the Month in which he is over drawn (which means last week of Aug and first week of sept counts as 2 x 15 =£30 ====Plus £10. 00 per day or part until the over draft is paid off . Isn't it he has on every statement a mention of an Overdraft limit ? ...He expects to pay the Interest on amounts overdue ,but how is The £15.00 PM and the £10.00 for each day additionally Justified ? He has transferred the due amount immediately from his Savings account with the same bank to clear no sooner he received the Letter. I am not so sure this is Legal ,as i do not think anybody reading their overdraft limit on statements have been made aware that these additional charges may be demanded in the Interest .

Answer 1

Unfortunately it is!!!!

Your son should phone his bank up and explain that this was a genuine mistake and he would look to take his business elsewhere if they dont put the money back.  I would be surprised if they dont credit his account.

Your son sounds like a good customer and I would really look at the terms and conditions of his bank and look at one which doesnt have such high charges as this does look like daylight robbery.

I would also suggest he looks at getting a small overdraft just in case and purely to avoid these crazy charges

Hope that helps....

Answer 2

It's a rip-off but I wouldn't consider changing banks; they're all in it together.  I can think of no other institution that could get away with this but the Government just turn a blind eye.  Naturally the bigger the profits that banks make, the bigger the amount of tax the Government can take off them.  I know some of you will say that some banks are running at a loss right now but that's just due to their own greed by lending money in such a frivolous way and not considering the fact that people can no longer pay it back.

Oh and APR...AER...what's that all about?  

Answer 3

He should have read the terms and conditions of the account when he opened it - and whenever the bank send him a new copy for changes.

Answer 4

Speak to the bank they are doing this a lot and I believe it is illegal but people pay out of panic. Make an appointment and go with him with your solicitors name, or if that doesn't work go to CAB. good luck.

Answer 5

I call it a rip off.Change your bank.