Whether we like it or not, Kiran Trivedi readers, we all occasionally need to
dip into our overdrafts to balance the books. But is your overdraft good value
for money? Well according to the Financial Conduct Authority (FCA), it isn’t.
The thing about overdrafts is that no one wants to dip
into them; it leaves you owing money and unless you have a student or post
graduate overdraft, you’re most likely going to have to pay a charge for that
service. However sometimes you have to, just to make it through the month. But
is your overdraft leaving you worse off?
Overdrafts
“Complex and Opaque”
The FCA has come out this month and put the whole
lender overdraft culture into the spotlight, by suggesting that it is “complex
and opaque.” What they mean by this, is that they are
hard to understand, which means that because customers don’t necessarily
understand the rules, they are vulnerable to losing money.
They’ve estimated that customers have lost in excess of
£8 billion to banks and building societies through complex overdraft rules, and
now the financial body has decided to launch a deeper investigation into the
issue over the summer. Watch this space to see how it plays out.
The FCA has been reported to have said on the issue by news sources that: “Even the most astute consumer could struggle to
understand what they are paying for" when it comes to an unarranged
overdraft. So what should you do to tackle this problem?
Kiran
Trivedi’s Guide to Handling Overdraft Issues
As long as you stay informed and you keep on top of
things, there’s actually quite a few things to control the situation with your
overdraft. These are:
- Research:
Before you agree to anything, do your research. It’s a very competitive market
out there at the moment, especially with the economic recovery, and if you look around, you’re sure to find
the right overdraft option for your personal finances
- Read the
Fine Print: Lenders don’t exactly like to advertise the more unpleasant
parts of their overdraft facilities, so they’ll usually stick it all in the
fine print. Make sure you read carefully before you sign.
- Budget:
An overdraft really should be a last resort; you shouldn’t be dipping into it
to fund things like shopping sprees. Carefully budget so that you only need to
use it in cases of emergency.
- Get Help: If you think you’ve been hit with unfair overdraft charges, and the bank are ignoring you, contact the FCA. Now is literally the perfect time, as they’re actually investigating the matter.
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