We’re re ed with anger!

WHAT TO DO WHEN THOS FEW things annoy bank customers more than hefty fines for accidentally going into the red. And while these fees are making account holders poorer, they are making financial institutions richer to the tune of £1.3 billion a year. JAMES

BANKS and building societies have been coming under increased pressure to cut the charges they make when customers go overdrawn without prior permission.

While authorised overdrafts — when your bank allows you to go into the red — are getting cheaper, this is at the expense of unauthorised overdrafts.

While no one would recommend exceeding your limit — and we would all expect to pay if we did so — the charges you face if you do slip up can be out of all proportion to your ‘mistake’.

As soon as you go into the red or exceed your credit limit you will be charged an unauthorised overdraft rate of anywhere between 15pc and 30pc on the balance.

Then there is a fee for wrongly going into the red. This can be a oneoff, monthly or even weekly charge, usually around £25. Then any items that are paid and push you further into the red will each be charged again at around £25.

If you have any direct debits on your account that are due to come out on the day you slip into the red, then you can quickly run up hundreds of pounds of charges. Now consumers who have been charged hundreds of pounds for the smallest error are fighting back — demanding to know how companies can justify pushing customers into debt at a time when the banks are making record profits.

And it is those on the lowest incomes, who need the most support from their bank to get them through difficult times, who are losing out.

‘The fees are more than the overdraft’

YOU slip into the red by 24p, but one fee for unauthorised borrowing and one for allowing a standing order or direct debit and you have incurred £60 in fees.

Some are more lenient than others in this situation. Barclays will only charge you once you go more than £5 into the red, and it will also allow only three fees in one month. It will also check other accounts in your name to see if you made a simple error such as writing a cheque from the wrong cheque book. HSBC has staggered fees and won’t charge you more than you are overdrawn if it is under £30 and Lloyds TSB limits you to three charges a month. Alliance & Leicester, though, will charge you £50 a month for the unauthorised overdraft and then add on unlimited unpaid and paid item fees. Abbey charges £20 for the overdraft and then unlimited item fees, but if you can prove it was a mistake, they will let you off.

‘No one told me I was in the red’

DUE to an oversight, you slip into the red. You continue using your account but at the end of the month, you discover that you have racked up £ 600 in fees through standing orders and direct debits that have been forced through.

Yet you never received a phone call, a letter or an e-mail. At no point were any transactions stopped.

Forget all notions that the customer is always right because banks say it is your responsibility to ensure you know you have funds available. This is their ultimate get- out clause.

Barclays and Lloyds TSB send a first- class letter advising you that you are overdrawn and that you have incurred a fee. Customers are given a contact number to call the bank. HSBC will tell you about a fine 14 days before it is levied. There is no notification that you have slipped into the red.

With Nationwide and Abbey, you have to wait until you get your monthly statement. So if you slip into the red at the start of the month then you may not find out about it until four weeks later.

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DANIEL WILLCOX is an apprentice alarm

fitter. When he changed jobs in September, he knew money would be tight until he got his next pay cheque. He twice asked Abbey for an overdraft to cover him until he got paid but was refused because he had one bounced payment in the past year. After falling into the red, he racked up 20 missed payments in September: more than £500 of fees. Abbey says it sent him a letter on September 5, but Daniel, 20, says the letter didn’t arrive until September 21, and he was too worried to contact them until September 29. The next day, he and his mother, Gina, went into a branch and had his card cut up. Yet Abbey says it has no record of this and Daniel missed another 15 payments. Daniel says this is because he was so far in the red that all standing orders and direct debits would bounce. He offered to pay Abbey all he could afford — £40 a month — but was told it was not enough because this would only cover the interest of 28.7 pc on the £1,200 overdraft. Daniel and his mother (pictured left) are angry that while Abbey was not willing to give him an authorised overdraft, it let him rack up huge charges rather than freezing his account. The case is being investigated by the Financial Ombudsman Service.