Investigation exposes hidden banking fees of £900 a year.
So-called 'free banking' is rapidly revealing itself to be one of the great financial myths of our times. A Which? investigation reveals how some consumers are being forced to shell out up to £900 a year in bank charges. That's enough for a holiday abroad, a new iPad including monthly bills for the duration of its 24-month contract or a fee-paying current account with benefits for between 5 and ten years.
According to the consumer group, there are huge variations in the charges associated with 'free' current accounts and being overdrawn for two days a month without permission can result in fees ranging from £120 to £900 a year, depending on the provider.
Even customers who have arranged an overdraft with their bank are at risk if they fall into the red too often, with many banks charging annual percentage rates in excess of those carried by some credit cards and personal loans.
Other fees associated with 'free' accounts If that's not bad enough, free current account customers are not just losing out when they dip into their overdrafts. In fact, the investigation exposes a number of other charges such as fees for withdrawing cash abroad, while consumers are also suffering through lost interest when they stay in credit.
With so many hidden costs awaiting unsuspecting consumers, it is not surprising that Which? found 62% of people have paid a bank charge they felt was unreasonable, with nearly all respondents (94%) sharing the opinion that banks should be much more transparent about hidden charges.
Peter Vicary-Smith, Which? chief executive, said: "When some people are paying up to £900 a year in bank charges, it completely shatters the myth that banking is free. It's a disgrace that the very people who bailed out the banks are being asked to pay more for the most basic accounts, while the industry continues to be rocked by scandals like PPI mis-selling, LIBOR rate-rigging and IT failures."
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