Myth of free banking: 9 in 10 accounts charge!

THE concept of free banking is a ‘myth’, an investigation has found.

Nine in ten current accounts charge fees, either monthly or for using an overdraft.

Eight in ten fee-charging accounts also pay no interest to customers in credit but penalise them for going into the red.

Those who already pay regular management fees shell out £147 a year on average, according to the analysis by Moneyfacts.

The more expensive accounts charge around £20 a month. But 39 out of 47 of these pay no interest to customers who have a positive balance in their account.

It means they make money from customers in the black as they lend the cash from deposits to borrowers in the form of personal loans, credit cards and mortgages.

Overdraft fees are even levied on those customers who pay between £1 and £19 a month for their current account.

Halifax’s Ultimate Reward Current Account, which charges a monthly fee of £15, also charges £1 a day for overdrafts of between £300.01 and £1,999.99 although it includes perks such as breakdown cover.

Only a few – M&S Bank, Metro Bank, Nationwide Building Society, Post Office Money and Tesco Bank – offer accounts without management or overdraft fees.