Borrowers with bank overdrafts are being driven in to debt by unfathomable charges when they bust their spending limits by just a few pence.
Consumer champion Which? Claims bank customers are paying over the top charges that can lead to them running up fees of hundreds of pounds when they borrow too much.
The watchdog also claims the fees are so complicated to calculate that even someone with a maths Phd can’t work them out.
Which? was reviewing government action to clamp down on how much banks could charge wayward customers – and concluded that new rules do not go far enough to stop people running up huge debts.
HSBC, says the consumer group, can easily charge a customer £150 a month for 21 days in a row of unauthorised borrowing and 12 payments out of the account.
For many borrowers, the extra charges are enough to push them in to a debt spiral.
“While the Government has announced reforms to tackle unfair overdraft charges, they don’t go far enough,” says Peter Vicary-Smith, chief executive of Which?
“It is extremely disappointing to find that bank charges are still too high, too complex and impossible to compare.”
The answer is to manage money better by budgeting to make sure overdraft limits are maintained, but this is often easier said than done as unexpected bills pile up and creditors demand payment.
For borrowers who are clocking up charges and interest on bank and credit card debt s every month, consulting a professional debt advisor can help.
Financial management firms can help people struggling with their finances to budget and prioritise debt payments.
One way to do this is under a financial management plan, which is a long-term solution to debt.
The plan lets lenders and a borrower set a new, more affordable, schedule for repayments while leaving enough money to pay essential living costs and day-to-day bills.
Sometimes, debt problem s are beyond a financial management plan, so other solutions are available – like a debt relief order (DRO) for tenants, individual voluntary arrangement s (IVA) or even bankruptcy.
A financial management company will review your finances and discuss the best debt solution to match your financial circumstances.
—- ENDS —-
Notes to editors:
- Money Debt and Credit is one of the UK’s fastest growing financial solution companies.
- The company was founded in 2006 on the belief that every client has the right to appropriate financial advice. Since then we’ve gone from strength to strength and have helped thousands of people with a variety of financial solutions.
- We offer a range of services including Financial Management Plans, Loans, Mortgages, Full & Final Settlements, Bankruptcy, Investments and Pensions.
- Specialties: IVA s, Financial Management Plans, Loans, Mortgages, Trust Deeds, Full and Final Settlements, Bankruptcy
For more information or debt advice contact:
Money Debt and Credit
45 Clarendon Road, Watford, WD17 1SZ
Tel. 0800 16 999 46
Image: Idea go