Unfair bank overdraft charges and a lack of available credit have led the UK population to lose trust in their banks, a new survey has revealed.
Research from money.co.uk carried out in 2009 has revealed that following the Supreme Court ruling in favour of banks over ‘unfair overdraft charges’, and with Britain still reeling from the effects of the credit crunch, just 7% of the population completely trust their banks to treat them fairly, whilst one quarter do not trust their banks at all.
The majority of customers do not believe that the banks are doing enough to help their customers avoid running up unauthorised overdrafts, for instance by allowing cash withdrawals and debit card purchases when funds are not available in their accounts.
Only 15% of British adults feel that switching banks would make a real difference to the way penalty charges are applied to their accounts.
The survey suggests that banks must look closely at the way customers are treated if trust is to be won back.
Bank Charges are High Interest Short Term Loans
Industry experts maintain that authorized overdrafts are really nothing more than high-interest loans for the employed.
Unlike flat fee payday loans, which are regulated and controlled, bank overdrafts work in an automatic manner with your debit card and cheques.
Most customers don’t even know they have withdrawn their limits until they are notified by the bank, by which time it is already too late as the charge has already taken place. As the Money.co.uk research reveals, banks may exploit this situation and only notify their customers after they have overdrawn on their current account limits.
If you also factor in the average bank penalty of £20 per bounced-cheque, then five overdraft items for £200 could add up to almost £300 including charges! By contrast, pay day loans for £200 would incur fees of only £45-£60.
February 23rd, 2010 at 10:15 am
[...] With savings rates falling whilst the cost of loans, credit cards and overdrafts are heading in the opposite direction, many people are disillusioned with financial services providers in the UK. Research published last week by Money.co.uk claims that just 7% of Britons trust their banks. Read More: Brits Lose Trust in Banks [...]