Personal Finance

The Importance of Understanding Your Bank Charges

Keeping on top of your finances is often easier said than done. With mortgage payments, utility bills, credit cards, car insurance, council tax and more, all being paid by direct debit every month, it can be difficult to keep on top of all your outgoings. If you let the ball drop and overspend even slightly, you could find yourself in your overdraught or even worse, over your overdraught limit.

It is imperative you understand what fees your bank charges or you could find yourself in a downward spiral to debt. Charges on charges are a common problem, with unpaid fees incurring further costs month on month. If left unchecked for too long, this could mean you’re unable to claw your way out of the red. If you are unsure of what your bank charges are, take a look at your statement or ask at your local branch.

Using both an arranged and an unarranged overdraught can cause you to incur fees. With an arranged overdraught you will be charged an agreed interest rate every time you dip in. The deeper you plunge into your agreed overdraught, the more interest you will pay.

If this is something you’re doing on a regular basis, consider other means of borrowing money. In this situation a credit card could be a good idea as long as you pay off the balance every month, as you won’t incur any charges if it is paid off in full.

However, even an arranged overdraught is better than no overdraught at all. Going overdrawn on an account with no overdraught facility can be very costly indeed, with fees of around

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