Bank Acount Charges Explained

Bank Acount Charges Explained

Bank acount charges can be generally split into 3 main groups each of which apply to almost all bank acounts, no matter what the type of bank acount.

Fixed Monthly Charges
Some bank acounts have a fixed monthly charge that a customer pays no matter how much they use their bank acount or the balance in their acount. This charge could be considered as a management fee, however in most cases it allows the bank to lower its transaction fees and provide a higher level of service.

These acounts tend to be called “Premier” or “Premium” acounts and usually have number of benefits above a free monthly fee acount. These services can include things like free borrowing, lower transaction fees, personal banking managers and higher rates of interest on balances. In addition some banks offer things like free travel insurance and car breakdown cover.

Transaction Charges
Transaction charges are the costs that a customer pays when they make a transaction on their acount. You tend to find that most banks do not make charges for things like depositing and withdrawing money or using a debit card for retail consumers however businesses are a different matter.

Consumer charges are usually made for transactions that sit outside the basic banking services like moving money abroad or making special payments. In addition overdrafts usually incur a charge for having the facility on your acount as well as interest on a negative balance.

Penalty Charges
Penalty charges are the costs that a consumer pays when they make transaction outside the rule of their acount. Penalty charges include things like unarranged borrowing. For example, if your acount balance becomes overdrawn and you have not arranged an overdraft then penalty charges are usually made. There will usually be a fixed cost, a daily/monthly cost as well as interest charges on the outstanding balance.

These bank acount charges can sometimes add up to quite a substantial amount as banks frown on unarranged borrowing. In addition, if your bank acount balance is in unarranged borrowing then if you make more transaction on the acount then every transaction can incur a charge.

Reclaiming Bank Acount Charges
In some cases bank acount charges can be reclaimed for up to 6 years however banks are awaiting various court rulings so for the time reclaiming has been put on hold. This does not apply to people in financial hardship however you can still apply for the reclaim of charges.