Santander’s overdraft fees, arranged, unarranged and the budget trap

ClearDebt’s Mike Morgan looks at the new overdraft fees announced by Santander and sees whether they’re going to make life easier or harder for account holders.

Santander recently announced some changes to their overdraft fees. ClearDebt’s Mike Morgan goes through the finer details to see whether Santander account holders are better or worse off now.

Quite by chance, I happened to stumble across the overdraft charges that are outlined in the table below. At first glance, and certainly in the printed literature that I have read – where they compare their charges with those of other banks, they do not look too bad, but as ever the devil really is in the detail.

What are the new Santander overdraft fees?

Click to enlarge or view the full summary announcement from Santander.

Santander’s arranged overdraft fees

For an arranged overdraft, they charge 50p per day, capped at 10 days each monthly statement period. In comparison with others, this is actually very competitive. It is where unarranged overdrafts are in place that the real pain starts.

If we consider, as an example, a case where a customer has an overdraft limit of £150 and believes their balance to be £124 overdrawn, they would still be able to write out a cheque for £25. In this case they would be within their agreed limit and would incur a maximum charge in a month of £5.

Santander’s unarranged overdraft fees

However, if this same customer made a slight error in their budgeting and their balance was £126 overdrawn then this is where the danger lies. As we all know, banks will make a charge for returning an item unpaid, whether that be a cheque, direct debit or standing order. In this instance, if they were to return the item unpaid then the fee incurred, £25, would still take the customer over the limit and would then be subject to a daily charge of £5. Those £5 daily charges are not limited to 10 days, but are capped at 20 days. So, for the sake of not honouring a cheque that would take a customer £1 over their agreed limit, the potential charges that the bank make will be £125!

Damned if you do, damned if you don’t – one banks way of “helping” their account holders.

And what if the bank honours the cheque? Well, it must be realised that the account will still go over the limit, so that £5 per day charge will still accrue, but you would hope that at least you will save the £25 unpaid fee. WRONG!!! They will charge a paid fee, which, unsurprisingly, is £25. In summary, damned if you do and damned if you don’t. I am aware that there are other banks that charge paid fees, but I am happy to report that they still seem to be in the minority.

Read the small print

The lesson here, surely, is to read the small print in great detail, and if you are living very close to the edge, then minimise your future losses by picking an account with the least charges. Also, if you are on the edge, it may well be worth having a chat with one of our professionally trained, qualified and very experienced advisors by calling us freephone on 0800 019 2095 or completing our online contact form.

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  1.  Thanks Mike. Some really great advice and help there. I’ll be sure to get myself some debt and then come and speak to you.

  2. Just checked my acccount and it is £10 capped at 20 days now and i take it the new charges this month for unautherized will cripple the poor.
    no more free overdrafts the banks have sucked us all in with free overdraft and if you can’t clear it you will pay £120 per year. What about those students who had all these free offers and now taken away
    Shame on you banks. We bail you out and now you come back to rob us blind and we do nothing

  3. They’ve just doubled the authorised OD charge. I live on my OD limit and so I’ll be paying £120/yr instead of £60/yr now. Some “re-organisation”!

  4. Mine is 50p a day capped at 20 days meaning my charges have gone from £2.50 to £10.00, my overdraft limit is £250. My partner is being charged 50p a day capped at 10 days and his limit is £750.00. How does that make any sense!

  5. I applied for an overdraft on my Santander account and was turned down so opened an account at Halifax.  I used the Halifax bank transfer service and for whatever reason my Santander home insurance direct debit did not move.  However Santander decided to pay the £12 even though they declined me an authorised overdraft only days earlier and put me £3 overdrawn.   I didnt see this as the only reason I still have the account is because you cant close it online or over the phone.  That cost me £125 in daily fees.  I paid it.  guess what this month a £25 paid item fee was added for last month.  10 days I have been overdrawn another £50.  That is £200 now in total for going £3 overdrawn!  Amazed.

  6. worst bank. All other banks eg natwest and barclays dont charge paid or unpaid fees. disgusting greed. I have transferred my accounts

  7. i aint got any overdraft, i didnt have £25 in to pay a direct debit on time,cut it short i now owe £280, iv been getting charged for charges.

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