- 25
- Nov
While more consumers may have found themselves feeling the pinch in the past year, new figures indicate that they may have been put under even more pressure as a result of hikes in unauthorised overdraft fees.
According to Money Expert, the penalty for exceeding an account limit has shot up some 20 per cent over the last 12 months, with the typical levy now standing at 30 pounds every time this happens.
In such circumstances, struggling consumers may find that going overdrawn further impinges on their ability to meet payment responsibilities such as personal loans, credit cards or mortgage contributions.
The hikes in unauthorised overdraft fees – equivalent to an additional five pounds every time a limit is exceeded – come in spite of an ongoing investigation in whether such charges are just and fair. In a landmark case brought by the Office of Fair Trading, banks are coming under scrutiny for charging such high fees, with certain quarters claiming that they are disproportionate to the costs incurred by the bank for processing the unauthorised transaction.
Commenting on the situation, Sean Gardner, director of Money Expert, said that consumers may be particularly exposed to these punitive charges in the coming months.
“Were approaching the most expensive month of the year and for those people already in their overdrafts the advice is clear, keep a close tab on your outgoings. A 30 pound charge isnt the Christmas present most of us are after and if you want to avoid these costs then watch your balance. Across the board borrowing is increasingly expensive and those customers living in their overdraft need to be aware that in the majority of cases theyll pay a premium for this cash,” he said.
He went on to state that it was surprising that banks felt it suitable to raise the levy imposed for going overdrawn while the landmark case was still being heard.
Consumers who need to give their bank balance a boost as the Christmas period approaches may be interested in applying for a cheap loan, which could help them avoid the risk of inadvertently exceeding overdraft limits during this time of heightened expenditure. Indeed, Money Expert found that many people are finding that money is increasingly tight, with more than a tenth (11 per cent) admitting to missing a payment on items such as credit cards, loans or mortgages within the past six months.
The group urged people to keep a close tab on their spending over the coming months in an effort to avoid such a scenario arising.
Elsewhere, personal finance expert at the Motley Fool David Kuo has warned that this Christmas may be particularly bleak for those who are struggling with bill payments and other areas of financial responsibility. Indeed, he said that up and down the country there are many people who are now finding themselves “living from hand to mouth”. For those who have been put in such a situation in recent months, taking out a debt consolidation loan may prove an effective way to get finances back on track during this difficult period.
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