Bank charges ‘can cause debt spiral’

Charges levied by banks against their customers can lead some people into a spiral of debt management difficulties, it has been claimed.

The National Consumer Council (NCC) has insisted that for many Britons charges relating to an unpaid standing order can cause serious problems in terms of paying off both the initial bill and the resulting fees.

With this in mind, the council is keen to see the ongoing court case between the Office of Fair Trading and a number of financial services firms establish a clear definition of which kind of bank charges are fair and which are not.

“We believe that it’s time that high street banks stop making easy money and take a responsible attitude to the impact of their actions on vulnerable consumers,” a statement from the NCC read.

“A charge of over £30 for an unpaid standing order is enough to trigger a spiral of debt that many people on low incomes may never fully recover from.”

Figures from the Credit Action charity recently suggested that UK consumers have been finding it increasingly difficult to become debt free because of the soaring rates of interest they are being obliged to pay on their borrowings.