Even when your bank balance is healthy, it still grates to see charges listed on your bank statement. It’s possible to reclaim bank charges if fees are unjustified or excessive.
What are bank charges?
All banks have different policies for charges and their amounts. They must publish this information and inform customers of any changes.
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Knowing what charges to expect helps you to plan for, or avoid, unwanted fees on your bank account. Here’s what to look out for.
Bank overdraft charges
1. Unarranged overdraft
Since April 2020, banks cannot charge a flat fee for unauthorised overdraft borrowing. So if your account slips into the red, you will only be charged interest. This table from the FCA shows how much customers can expect to pay for an unarranged overdraft. The charges will increase for more days and a bigger overdraft.
Many people have successfully claimed back substantial amounts of money in fixed bank charges for unarranged borrowing. It’s still possible to get your money back as long as you can demonstrate that you were in financial hardship at the time, or that the fees caused you to experience financial hardship.
2. Unauthorised overdraft transaction fees
Banks used to charge for honouring transactions on an account in unauthorised overdraft. They are no longer allowed to do this, but customers may still claim back these charges if they have been a problem in the past.
3. Direct debit or standing order refusal
Sometimes banks will refuse to pay a direct debit or standing order when an account is in an unarranged overdraft. There will be a flat fee for this of up to £25.00 Some banks may charge a smaller amount for each unpaid transaction.
There is a cap on the amount you will have to pay each month. This is thanks to the Monthly Maximum Charge (MMC). It’s a good idea to check what your bank’s MMC is so that if your finances are going awry, you can plan for the worst.
You may be able to claim unpaid transaction fees back. For example, a bank shouldn’t refuse a direct debit if you have another current account with them that is in credit.
Bank charges for services
4. Cash machine charges
It is increasingly difficult to find an ATM that allows people to withdraw cash without charge. Withdrawing cash from an ATM can cost up to £2.00 or even more. With banks closing branches to save money, this means that account holders must sometimes pay to access their own money.
5. One-off bank fees
Account holders have to pay a fee for foreign transactions, or large same-day transfers. You might be charged for information in the form of duplicate bank statements, or for a reference.
The most common bank charge for cheques is made when you request that a cheque is stopped. Customers may need to stop the payment if the cheque has been lost, or filled out incorrectly. You can also pay to get a cheque cleared more rapidly.
While payments by cheque are rare, some banks charge to process over a certain number of cheques per month. This is to steer customers towards a business account where there would be more charges.
Most one-off bank charges are clear up front before you use the service, so it would not be reasonable to reclaim them unless the bank makes a mistake.
7. Packaged bank account charges
Bank customers who have been paying a monthly fee to have a current account with extras could claim back these charges if the account was mis-sold. Packaged accounts offer insurance deals, current account interest, and other perks in return for a monthly fee. These extras may not be of any use to many customers.
If you are paying your bank to have an account with them, make sure you are benefitting from the arrangement. Otherwise, claim the charges back, proving that the account was mis-sold.
How to reclaim bank charges
- Collect as much information as you can about how much you have paid, when and why. Find your paper copies of statements, or access copies online, and ask your bank to provide a statement of charges on your account.
- Contact your bank. It is helpful to have your case in writing, but nothing beats physically going into the branch and speaking to someone who can help. This way you may get some, or all, of the charges reimbursed immediately.
- If your bank is unwilling to repay unreasonable charges, you can make a complaint through the Financial Ombudsman Service.