Bank and Credit Card overcharging explained
Once upon a time, Banks’ and Credit Card charges were subject to comparatively little regulation. They did not have to justify the level of their penalties or when they chose to levy them. They were permitted to raise charges upon charges (so if a penalty made you overdrawn, you could be penalised again for the overdraft).
Not any more.
Whilst banks are not required to disclose the costs they incur as a result of your unauthorised overdraft or unpaid cheque, direct debit or standing order, contract law usually demands that their penalty charges reasonably reflect those costs. Research suggests that the real cost can be £4.50 or less – so charging an average of £30 a time could well be unjustifiable in the majority of cases.
The Office of Fair Trading has already forced banks to reduce their penalty charges for credit cards to a maximum of £12, and is currently conducting an investigation into banks’ current account costs. Banking Refunds have been successfully reclaiming the whole amount of the charges. In the meantime, banks are understandably increasingly reluctant to allow cases to go to court.
If you believe your bank’s overcharged you, it’s time to talk to one of our expert Advisers. Then we’ll do everything we can to get back 100% of your money plus statutory interest in the shortest possible time.
Case studies worth studying.
The best way to explain what’s likely to happen is to give you a couple of examples.
Mr H’s bank took £64 in penalty charges from his account. On appealing to the bank, they defended their position but agreed to refund half as a gesture of goodwill. Mr H was still not satisfied, and threatened court action covering all overcharges for the previous six years. Soon after he filed his claim, his bank refunded him £840.
Chrissie’s benefits office failed to pay her for a couple of weeks. Her bank overcharged her for exceeding her overdraft limit and refused some of her direct debits. The charges significantly derailed her budgeting and led to more charges – eventually her debt spiralled to £3600. Finally she was faced with the stark choice of considering bankruptcy – or taking on her bank for the return of all those unfair charges.
