Charges When You're Overdrawn

Putting your current account into overdraft means you pay extra. You'll have to pay interest on the amount you borrow (which will usually be at a higher rate than normal if you haven't arranged in advance to have an overdraft). But the amount of interest won't usually be very great if you slip into the red only occasionally. The real problem with most bank accounts - but not with building society accounts - is charges:

- transaction charges: with most traditional bank accounts, if you're overdrawn, you have to pay around 20p to 40p in charges every time money is withdrawn from your account (whether by cheque, cash card, standing order or direct debit) and in some cases >- flat fee: many newer bank accounts charge you a flat fee when you're overdrawn instead of making transaction charges. The fee could be anything from a few ££s up to £60 or so a month

- arrangement or administration fee: if you do things properly and arrange your overdraft beforehand, you're likely to face an arrangement fee of around £40 to £45. If you don't arrange the overdraft, your bank might let you overdraw up to a limit but the>- other charges: if your cheques are bounced you may be charged up to £45 or so for each cheque. You may also have to pay up to £40 apiece for letters from the bank warning you that you're


TIP - Always ask about related costs - such as transaction charges and arrangement fees - before you arrange an overdraft. You may find that it's easier and cheaper to use your credit card for occasional overspending.

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Current Account Charges

Charges when you're in credit

All the major banks, and the building societies which offer current accounts, offer 'free banking' as long as your account is in credit - this means that you pay no charges for the standard services such as payments by cheque, standing order or direct debit, or cash card withdrawals. But even if you're in the black, banks may charge you for a variety of other fairly humdrum services - see the Table below. Building societies offer fewer extra services and, where they do, they're less likely to charge.

Extra Current Account Charges

Service ... see: Current Account Charges

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