A new survey from Peachy Loans finds that there are huge sums of money being spent on unarranged overdraft fees. The survey had more than 2,400 UK respondents who had at least one bank account with a big British bank. An unarranged overdraft is when you go over your limit that you agreed with your bank without notifying them in the first place.
Why is the Amount so High?
One reason that unarranged overdraft fees accumulate over time is that customers don’t know that the fees exist. In Peachy’s survey, 64% of people said they were unaware that unarranged overdraft fees existed with their account in the first place. This means that people can over their limit without having realised that they will have to pay a fee for this. Banks look for many different types of ways to extract extra cash from customers – unarranged overdraft fees is one of those ways.
Kristjan Novitski, CEO of Peachy said: “The hidden fees and charges mean that banks capitalise on their customer’s lack of knowledge and understanding of the terms and conditions; often charging as much as £6 per day for the length of time that their customer is in their unarranged overdraft for. Our research backs this up, with only 36% saying that they were aware of the charges of an unarranged overdraft.”
With overdraft fees playing a big but hidden role in many Britons’ financial lives, it’s important to know how to manage these fees so that they don’t take over. 41% of people surveyed said that they felt that unarranged overdraft fees were unfair. To make sure that you don’t get bitten, make sure that you read the small print of all of your bank accounts. You also need to ensure that you stick to your budget and look for alternative cash sources when you are caught up in a cash crunch. Alternative sources of income include short-term loans.
Ultimately, unarranged overdraft fees can be expensive if you don’t realise that you are being charged. Take control of your finances by knowing how unarranged overdraft works.
£216 is the average amount in overdraft that Britons pay