What are late payment charges and bank charges?
Bank charges and late payment charges are fees that your bank will expect you to pay if you:
- Go over your overdraft limit (both authorised and unauthorised)
- Have payments such as Direct Debits and standing orders attempted and returned because there are no funds available
- Your payment didn’t clear so you are charged a late fee, for example on short term loans
How to check if you could be subject to charges
Checking with your bank or building society is the best way to ensure that you have the information you need about bank charges. You could visit their website, call their telephone team or pop into a branch to ask. They will be able to provide you with the information you need and explain why these charges may be incurred.
If you’re worried that you haven’t got enough money to cover your phone bill or run the risk of facing a late credit payment charge, then you’ll need to speak to your creditors or service providers.
Some current accounts will also charge you a monthly fee and in return you’ll receive benefits such as insurance cover and discounts. You can read more about the different types of bank accounts here.
What is the best way to deal with late payment charges and bank charges?
The number one rule is to never ignore bank charges or late payment charges. In most cases you should be able to work something out with your bank or creditor, to make sure that you don’t spiral into more difficulty down the line.
Most companies are quite willing to discuss payment plan options or payment of charges in a way that suits you.They know that circumstances can change and as long as you keep them up-to-date, it will stop them from chasing you.
Can you reclaim bank charges?
Being able to reclaim bank charges is a different process to being able to reclaim bank account fees. With monthly fees for some current accounts, you’ll need to raise a complaint with your bank and even take it to the Ombudsman if you disagree with their decision.
With bank charges, you may be able to reclaim them if you meet certain criteria. Letting your bank know you are in financial hardship can help them make a decision about whether or not to refund you. Your banking history will be able to show them this, as you’ll most likely have frequent and regular missed payments and be relying on your overdraft for day-to-day spending.
How can I reclaim bank charges?
There’s a very similar process to reclaim bank charges. First of all,speak to your bank either via letter or over the phone and lay out the details of why you believe you should receive a bank charges refund. Sometimes a letter can be more useful to you, as you can take time to consider what you need to say and make sure you have included all the detail you want to.
If your request is declined then you can again raise a claim with the Ombudsman. It is worth noting that their decision is final, so if you are declined again then you won’t be receiving a refund on any bank charges.
Reclaim overdraft charges
Over the years you may have paid hundreds or even thousands in overdraft charges and even though it may only be a small sum, it can quickly add up. With daily interest on top, it can be easy to fall into further debt and you could find it hard to get back into the black.
If you’ve only dipped into your overdraft once or twice, you may be able to reason with your bank and see if they will let you off as it is a rare occurrence. In this case, you would need to either write a letter or speak to your bank over the phone. If you are going to give them a call, make sure you’ve written some notes beforehand so you can clearly explain your case.
For larger amounts or if your bank has declined your refund, you can claim via the Ombudsman website. They have claim forms that you need to fill in before they investigate and speak to your bank on your behalf.
Should you consider switching banks due to bank charges?
The most important thing to do if you’re considering switching banks is to do your research. You could save money on lower bank charges, or you may find that you can get a higher agreed overdraft so that if you did dip into it, the fees wouldn’t be so steep. Discover the best account for your circumstances with our bank account comparison table.
If you are going to switch bank accounts then you’ll need to pay off any outstanding overdraft balance before you can close your original account, so make sure you have the funds in place to do this.