Low credit interest, high overdraft charges and big fees on spending abroad means that, while we may not pay a monthly sum for our current accounts, banking is not free, according to the experts at
Which?.
The self-styled consumer champion's new research reveals that consumers could be spending as much as £1,140 a year on unauthorised overdraft charges if they bank with Santander.
In the
Which? scenario, a customer goes overdrawn due to two direct debits, which are then both paid by the bank. Santander Bank Account charges customers £35 per paid item and a £25 monthly unarranged overdraft fee. This equates to £95 in a month (£1,140 a year if repeated over 12 months) for using an unauthorised overdraft in this way.
Disparity around charges doesn't end there, says Which?. While First Trust charges customers £185 a year for using a £200 authorised overdraft six days a month, Coventry BS has no charge for a £250 authorised overdraft.
Furthermore, each bank has very different ways of charging for overdrafts, making it difficult for consumers to compare accounts.
Even customers who stay out of the red and remain in the black are not getting a free ride from the banks. Which? found that lost interest and fees for using their card abroad could be costing consumers as much as £57 a year - and much more for those who travel overseas regularly.
"Contrary to popular belief, banking is not free. Whether it's through low interest rates or high charges, we all end up paying for our current account in the end,” said Peter Vicary-Smith, chief executive at
Which?
"The complicated ways banks present charges makes it difficult for people to work out whether they're getting a good deal. If you regularly go into the red or want a better return on your money, then the figures speak for themselves - it's worth making the switch to a more suitable account."
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