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.
