|
Home / Finance / Credit
Excessive bank account and credit card charges attacked as “unfair” and possibly illegal
By:Michael Hanna
One missed credit card payment, or going overdrawn without permission, and suddenly a £30 charge can be incurred. Bank charges can seem to be unfair and too harsh given the frequently tiny amounts of unauthorized borrowing involved. Now it seems that the law could be in agreement.
Following on from an investigation launched in October 2003, eight major credit card companies were told in July 05 by the Office of Fair Trading (OFT) that the charges they levy for late payments were "disproportionately high", and that charges needed to be adjusted to better reflect the costs to them of managing late payment. Throughout the investigation, the credit card firms continued to maintain that the late payment charges they imposed were fair.
The legality of these charges are being questioned by a Scottish law firm, supported by the Scottish Citizens Advice, who are encouraging consumers to challenge the right of banks to charge such high penalty fees. With current high street credit card typical APRs ranging from 5.9% to 29.9% (source http://www.moneynet.co.uk/credit-card/index.shtml ) this is up to 25.4% points above the present 4.5% Bank of England base rate, and banks cutting the interest rates on current and savings accounts (see http://news.ft.com/cms/s/faed1a82-8e9c-11da-b752-0000779e2340.html ), many consumers see the levels of the bank charges as an additional means of revenue generation by the banks through excessive penalization of consumers beyond the actual costs involved.
"The law says if someone breaches their contract, for example you go over your overdraft without permission, the bank's only entitled to recover its actual loss," Mike Dailly, Principal Solicitor at the Govan Law Centre told BBC Money Box, "If you get an automated letter from your bank for going over your limit, that costs about 50p. So why should someone get a £36 letter for that transaction?".
In a previous press release, the OFT stated that it, “considers that, in a consumer contract, a default charge is likely to be disproportionately high if it is more than a genuine pre-estimate of the damages that the card issuer would win in court if it sued the cardholder for breach of contract.”
A representative of the British Banker's Association told the BBC that the banks were not charging customers more than the actual cost, citing that the charges were to cover additional costs incurred due to a need for human intervention, “to extract the item from the day's work, to research the customer's recent credit profile, and then a managerial decision as to whether to return the unpaid item.”
The Glasgow based Law firm states that, “The legality of bank charges has yet to be ruled on by a senior UK court but these will not be enforced if they are found to be 'penalty' or 'unfair' charges.” Until a final ruling is made by the courts, they have drawn up a letter citing both Scottish and English case law along with the regulations which apply throughout the UK to help customers get their charges refunded.
Disclaimer:
All information contained in this article, is for general information purposes only and should not be construed as advice under the Financial Services Act 1986.
You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts.
Useful resources:
Credit card rate comparisons ( http://www.moneynet.co.uk/credit-card/index.shtml )
Current and savings account interest rate cuts further information ( http://news.ft.com/cms/s/faed1a82-8e9c-11da-b752-0000779e2340.html )
Author:
Michael Hanna
About Michael
Michael is a keen writer, and internet marketer living in Scotland:
Contact details:
E-mail: samqam@googlemail.com
Phone: 0131 561 2251
Michael's Website: Taxi Belfast
Digg
del.icio.us
Blink
Stumble
Spurl
Reddit
Netscape
Furl
Article keywords: bank account, current account, financial comparisons, credit card, credit, personal finance, finance, money, credit cards, debit cards, savings, bank accounts, Moneynet, moneynet.co.uk, ft.com, financial times
Article Source: http://www.articles2k.com
Author:
Michael Hanna
About Michael
Michael is a keen writer, and internet marketer living in Scotland:
Contact details:
E-mail: samqam@googlemail.com
Phone: 0131 561 2251
Michael's Website: Taxi Belfast
View their website at: gransha-taxi.co.uk
|
|
| Top Credit Articles |
- 1). What Is a Good Credit Score – How Can I Raise Mine? By : Peter Crump
What is a good credit score? When you request a free copy of your credit report, you will find a score assigned to your credit history. This score will determine whether or not creditors will grant you the loan or credit that you want because it gives them an idea of your risk to repay. Generally, the answer to the question “what is a good credit score?” is the higher the better.
|
- 2). Paying Off Your Credit Card Balances: Running The Numbers By : Stephen L. Nelson, CPA
Ever thought about paying off your credit card balances? Maybe you would like to be debt free just to reduce your stress. Or perhaps you need to be debt free to retire.
If you have Microsoft Excel running on your computer at home or work, you can use Excel’s NPER function to calculate how quickly you can pay off a debt such as a credit card balance.
|
- 3). Credit Card Faq - Credit Card Security And Authentication By : Joseph Kenny
With the ever rising reports of credit card fraud, fraudulent use, internet phishing and identity theft, people are rightly concerned about credit card security. Fraudulent credit card use can be an annoyance at best, and seriously damage your credit at worst. It's only reasonable that people have questions about credit card security and authentication methods.
|
- 4). Online Credit Card Application: The Easiest Way To A Customer’s Heart By : David Riewe
Many credit cards are offered in the market today thus, making companies more aggressive in advertising and marketing their card services. These companies (e.g. banks, department stores, specialty stores, airlines, hotels, etc.) have found a powerful tool in catching the attention of prospective card holders: online credit card application.
What advantage/s does online credit card application offer?
The bottom line of online credit card application is “convenience”.
|
- 5). How To Build Up Your Credit By : Ken Snow
There are many effective ways to build credit. In order to keep creditors from bothering you, and in order for you to get a loan with a reasonable interest rate, you need to learn how to build your credit. The best place to start is to not buy things that you don’t need. If you always make impulse buys, you will find yourself in deeper debt very quickly.
|
- 6). Best Rewards Credit Cards By : Richie Chapin
It's almost a guarantee when you check your mailbox you will have a couple pieces of mail offering you a pre-approved credit card. Now most people will casually discard them without any regard to the offer that is inside. But before you throw away that credit card offer you may want to take a peek at it. Many credit card companies are now offering you FREE rewards just for using your credit card.
|
- 7). How to Choose the Right Credit Card For You By : Richie Chapin
So your thinking about getting a credit card but your not exactly sure what to look for right? Well there are a lot of different things to consider when applying for a credit card. Some things to think about are the interest rate, annual fees and features the credit card may offer. Here are a few tips that will help you choose the best credit card for you.
|
|
|
- 9). Credit Bureaus Adopt New Credit Scoring System By : Rick Hendershot
The three major consumer credit bureaus in the U.S. have recently created a new credit scoring system that will give financial institutions a more consistent evaluation of the credit worthiness of applicants.
The three agencies -- Equifax, Experian and Transunion -- have introduced the new system called "VantageScore". The new scoring system will be used immediately for reporting to banks, lenders, and credit card companies, and will be available to consumers later in the year.
|
- 10). The Travails Of The Pros And Cons Of A Small Business Credit Card By : Sohel Katir
For small business credit card getting a sense out of a deal is, in some instances, the most difficult thing to do. This is because most people could not instantly figure out the benefits they can derive from obtaining it.
Take for example the case of small business credit card. Some people contend that business credit cards are crucial in the growth of a business, while other s contend that it is just one way of losing their investments.
|
| New Credit Articles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 10). Paying The Price Of Credit Card Jumping By : Joseph Kenny
Having a debt and paying no interest on it seems almost too good to be true. But many consumers use their credit cards to do just that. The process is known as rate surfing or credit card jumping.
|
|
|
