Banks make killing on 14 million overdrafts


C

Crowley

The pips are starting to squeak for many .......

Banks make killing on overdrafts
Sean Poulter, Daily Mail
31 March 2006

http://www.dailymail.co.uk/pages/dm...e.html?in_article_id=407971&in_page_id=7&ct=5

FOURTEEN million Britons are weighed down by overdrafts - and the big
banks are cashing in to the tune of £4.1bn a year.

The figure is up 40% in little over two years after banks imposed big
increases in penalty charges, a report published today reveals.

It highlights that for many Britons overdrafts have become a necessity,
not a short-term borrowing facility.

Customers can be hit by a fee of £30 for a single 'offence' of going
over their limit. This then triggers a host of other fees, which can be
as much as £39 a time, for bouncing cheques and declining direct
debits or standing orders.

The screw is turned even tighter by sky-high interest rates, running at
close to 30% with many banks.

The report, by price comparison company uswitch.com, said the banks
view overdraft charges as a huge money-spinner.

Around 28m people have an overdraft facility on their account, with 14m
making regular use of it. It puts the running total for this overdraft
at £10.1bn, an increase of 125% in just six years.

The report found that two million people exceed their authorised
overdraft limit, or go overdrawn without authorisation, at least four
times a year - generating an annual bill of £280 each.

Meanwhile, some 3.5m are permanently overdrawn - and are suffering huge
costs and charges. An estimated two million of the nation's workers are
still overdrawn even after money has gone into their account on payday.


Britain's personal debt mountain - which now stands at some
£1.2trillion - is generating huge profits for the big banks, according
to uswitch.

Nick White, head of personal finance at uswitch, said: 'Overdraft
charges are a huge moneyspinner for the banks, who are estimated to
rake in around £3bn a year from people who go overdrawn without
authorisation or who exceed their authorised overdraft limit.

'Overdrafts are now an everyday part of life, but we are concerned
about the increasing reliance that people are placing on them.

'They are no longer seen as a short-term borrowing facility - and for
the 3.5million people in this country who are permanently overdrawn,
they are an absolute necessity.

'People are now relying on their overdraft to buy their shopping (39%),
pay their mortgage or rent (14%) and to pay their bills (39%).'

Keith Tondeur, chief executive of the money education charity Credit
Action, said: 'This survey throws up some really frightening figures
and trends.


'Millions of us are permanently living beyond our means and the lack of
even basic money education means most of us haven't the faintest idea
how much this is costing us.


'Overdrafts have gone from being a facility to use in an emergency to
something we depend on. While some of the blame for this can be laid at
the lenders' door it also says something about the 'short-termism' and
instant gratification culture that engulfs our society.'


The British Bankers' Association yesterday unveiled changes to its
code, which it claims will tackle the problems of 'binge lending'.

Bank staff have been found dishing out big loans to customers without
making proper checks on their ability to repay. Some have authorised
loans despite clear evidence customers could not make repayments.

The new regime includes provisions for tighter checks on the finances
of potential customers. However, the scheme has already been dismissed
as a cosmetic exercise by some commentators.

Banking industry expert Iain MacQueen-Sims said: 'This is window
dressing. The banks like to give the impression of action, but nothing
will change.'

Mr MacQueen-Sims, of audit company OmniCheK, said the problem stems
from the fact that the banks effectively regulate themselves, when it
comes to current accounts at least, through the Banking Code Standards
Board.

'The existing banking watchdog is incapable of performing any useful
role,' he added. 'The country needs an official watchdog with teeth.'
 
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F

Frinkenstein

The pips are starting to squeak for many .......

Banks make killing on overdrafts
You seem to post a lot of these 'financial' posts, Crowley. Are you
having financial difficulties? And if not, why not? The rest of us are!
:-D
 
M

Maria

Frinkenstein said:
You seem to post a lot of these 'financial' posts, Crowley. Are you
having financial difficulties? And if not, why not? The rest of us are!
:-D
I'm not - my bank has just thrown a 10k overdraft at me (I had 5k for
the past 3 years and never used it).
I've never been offered so many unsecured credit cards and loans in my
life in spite of a lousy credit rating due to lack of income. Can't get
a mortgage for love nor money though, even though it's secured on a
property. Funny old world innit?
 
S

Sam Smith

Frinkenstein said:
You seem to post a lot of these 'financial' posts, Crowley. Are you
having financial difficulties? And if not, why not? The rest of us are!
:-D
It's because he's saved his money and not made a 'ridiculous' house purchase
like the rest of us.
 
R

Richard Faulkner

In message said:
he pips are starting to squeak for many .......

Banks make killing on overdrafts
Sean Poulter, Daily Mail
31 March 2006

http://www.dailymail.co.uk/pages/dmstandard/frame.html?in_bottom=http://
www.thisismoney.co.uk/saving-and-banking/article.html?in_article_id=4079
71&in_page_id=7&ct=5

FOURTEEN million Britons are weighed down by overdrafts - and the big
banks are cashing in to the tune of £4.1bn a year.

The figure is up 40% in little over two years after banks imposed big
increases in penalty charges, a report published today reveals.

It highlights that for many Britons overdrafts have become a necessity,
not a short-term borrowing facility.

Customers can be hit by a fee of £30 for a single 'offence' of going
over their limit. This then triggers a host of other fees, which can be
as much as £39 a time, for bouncing cheques and declining direct debits
or standing orders.
What on earth is new about this story.... I was hit by inordinate fees
and penalties when I went over my limit in 1977... 30 ****** years ago!!
 
M

Mel Rowing

Richard said:
What on earth is new about this story.... I was hit by inordinate fees
and penalties when I went over my limit in 1977... 30 ****** years ago!!
Quite!

An overdraft is a financial service. Banks make money out of providing
financial services just as any other business makes money out of
providing services. Hardly earrth shattering stuff.

My garage makes money out of providing motor vehicle repairs and
servicing. This Monday they charged me an arm and a leg for around 3
hours work. They refused to budge on the bill and so I shall not be
troubling them again. Banks are not immune in similar respect.

It's cheaper not to get into debt but sometimes you have to. If you do
debt is cheaper if it is pre-planned. The easiest method is not always
or even most probably the cheapest.
 
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J

Jonathan Bryce

Frinkenstein said:
You seem to post a lot of these 'financial' posts, Crowley. Are you
having financial difficulties? And if not, why not? The rest of us are!
He is desperately hoping the housing market will crash so he can afford to
buy a house.

I'm hoping that will happen as well.
 
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P

panhandler_14_88

Frinkenstein said:
You seem to post a lot of these 'financial' posts, Crowley. Are you
having financial difficulties? And if not, why not? The rest of us are!
:-D
Get a job then, you dole-sponging yid!!!!!
BWWWUUUHHUUUURRRRGGGHHHHHHH!!!!!
 

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