Going overdrawn continues to be a costly mistake with consumers paying a combined £300 million in unarranged overdraft fees in the past year.
Research published by comparison website uSwitch shows 13% of all bank accounts were overdrawn at some point in the year to April 2017. The average charges to the consumer were £33, making a combined total of £300 million.
In 5% of all cases the unplanned overdraft fees cost more than £100.
Typical reasons for going overdrawn were paying household bills and the weekly grocery shop.
Many consumers say that they would like the option to turn off the unauthorised overdraft facility, with their card instead being declined when they try to make a purchase without having sufficient funds. Some banks offer this facility but it is not standard across the industry. Check with your provider if this is a service you’d like activated.
However, almost half (46%) of people charged for using their unarranged overdraft say they complained to their bank, with 62% of these consumers getting an immediate refund.
Tom Lyon of uSwitch says: “Banks are raking in millions every year from unarranged overdrafts and failing to do everything they can to prevent customers from dipping deeper into the red.
“Consent and, ultimately, control over finances needs to be in the hands of consumers. Yet, too many are in the dark about whether they can turn off their unarranged overdraft facility and avoid these extortionate fees.
“If consumers would rather have their card declined at the checkout than be stung by sky-high fees, they should be given the option to do so."