1 in 12 current account customers hit by unauthorised overdraft charges

One in 12 current account customers find that “free banking” is anything but when they are hit by unauthorised overdraft fees and returned item charges.

According to research carried out for budgeting account provider thinkmoney.co.uk, more than one in fifteen (7%) current account customers say that they’ve paid charges for bounced Direct Debits, bounced cheques or unpaid Standing Orders in the past year. This might seem like a relatively small number, but equates to 3.5 million people across the UK.

And as the charge for bounced payments can be as high as £15 per transaction, it’s these people who may be bearing the brunt of bank charges. Even when the charges are capped the amounts can be high – one basic bank account provider caps its returned item and overdraft charges at £150 a quarter.

For those who slip into an unauthorised overdraft, the charges can mount up too. 13% of current account customers say they’ve been hit by arrangement fees when going overdrawn without authorisation, and one in 12 (8%) current account customers say they’ve paid daily unauthorised overdraft usage fees. And of those who have paid some sort of bank charge, more than half (56%) claim they were pushed back into an unauthorised overdraft as a result.

In addition to those paying for an unauthorised overdraft, nearly one in five (18%) current account customers say that they have paid daily usage fees for dipping into their authorised overdraft in the 12 months ahead of the survey.

Ian Williams, spokesman for thinkmoney, says: “They may only account for a small percentage of current account customers, but those paying for bounced payments and unauthorised overdrafts shoulder a heavy burden of bank charges. These can add up to a sizable sum each month, and if a customer has ended up missing payments and going over their overdraft limit because their finances are stretched, this could result in them struggling even more.

“The thinkmoney Personal Account charges one affordable flat-rate fee a month and customers are never pushed into an unauthorised overdraft. There are no charges for bounced payments either, as our Money Managers help ensure that all the Direct Debits and Standing Orders our customers tell us about are budgeted for each month so they can’t be missed.”