Merryn's Blog

Don't bank on the end of overdraft charges

The office of fair trading 'expects' banks to let you opt out of unauthorised overdraft facilities. But I wouldn't be so sure.

The Office of Fair Trading (OFT) hassaid it expects banks to allow customers to opt out of unauthorised overdraft facilities.

At first glance this sounds like good news. If you could opt out of unauthorised overdrafts, then you get to opt out of the charges that go with them. Instead, you'd live in a sensible world where you can only spend what you have or at least just what you have agreed to borrow. No extra handouts shackled to a huge charge.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

But sadly, the key word is "expects". The OFT doesn'tsay that the banks "must" make this change. Just that they expect that over the next two years there will be a "greater ability for customers to 'opt out'".

I don't think it will happen. Unauthorised overdraft charges are a big money-spinner for the banks. And as we saw with last year's court battle, they will fight for the right to keep charging.

Advertisement
Advertisement - Article continues below

The OFT didn't even manage to get a court to agree to it investigating these charges, so the idea that the banks will voluntarily let customers opt out of them seems a little far-fetched to me.

This seems to be one rip-off the banks will keep using. So take control yourself and don't spend more than you have.

Advertisement

Most Popular

Visit/investments/property/house-prices/600840/the-biggest-risk-facing-the-uk-housing-market-right-now
House prices

The biggest risk facing the UK housing market right now

For house prices to stagnate or even fall would be healthy for the property market, says John Stepek. But there is a distinct danger that isn't going …
17 Feb 2020
Visit/currencies/600842/eur-usd-euro-slide-against-us-dollar
Currencies

The euro’s slide against the US dollar looks set to continue

The euro has been in a bear market against the US dollar for two years now. And on a broader scale since 2008. A decline like that is telling us somet…
19 Feb 2020
Visit/investments/stocks-and-shares/share-tips/600811/three-overlooked-stocks-to-buy-now
Share tips

Three overlooked stocks to buy now

Each week, a professional investor tells us where he’d put his money. This week: Joe Bauernfreund, portfolio manager at the AVI Global Trust, highligh…
17 Feb 2020
Visit/investments/commodities/600729/the-rare-earth-metal-that-wont-be-a-secret-for-long
Sponsored

The rare earth metal that won't be a secret for long

SPONSORED CONTENT – You can’t keep a good thing hidden forever; now is the time to consider Pensana Rare Earths and the rare earth metals NdPr.
31 Jan 2020