Slip into the red may cost you £900

Published on 21/08/2012 00:44

ADDITIONAL charges of hundreds of pounds a year “shatter the myth” of free banking, watchdogs have warned.

Which? found some customers are paying up to £900 a year for being overdrawn for two days a month, while others are missing out on lost interest and hefty fees for withdrawing and spending cash abroad.

More than six-in-ten people questioned by the consumer champion said they had paid a bank charge they believed was unfair, hidden or disproportionate. The survey of more than 2,000 people also showed 94 per cent say banks should be more transparent about charges.

Researchers uncovered huge variations in the cost of “free” current accounts. Going overdrawn for just two days a month costs £75 with the Yorkshire/Clydesdale Bank Current Account Plus – or £900 in a year. Citibank, Ulster Bank, First Direct, HSBC and Nationwide charge more than £50 a month.

The Financial Services Authority said regulatory intervention might be needed to instruct banks to charge for current accounts. Which? said any agreement by the banks to start imposing a monthly fee would breach competition law and there should be strict penalties against such collusion.