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Bank Accounts Are ChangingBarclay is just one bank that has decided to change their current accounts. Most are seeing it as a way to get consumers into a very high priced deal though. Last week a complaint was lodge regarding Barclay and the consumer understanding of their new current accounts. A lot of consumers are confused by the simplicity the accounts are supposed to offer and fear that other banks will follow suit. Consumer groups have been looking at Barclay, which is the 3rd largest bank in the UK. The bank accounts have been changed to sell a fee current account. The fees are not exactly shown on the front page though. Instead these fees are hidden in a confusing jumble of information. The most expensive account is the Premier Life at 25 pounds a month. There is also a 14 pound a month Additions Active account that they are trying to sell. The bank has been successful as one in four consumers has taken on the accounts. Most of the changes being discussed have not been completely enforced and will not be until August. It seems that the banks will benefit about 2 million pounds for those who tend to overdraft their accounts. There is an estimation that Barclay’s current 11 million customers tend to go into overdraft every time the bank raises the interest being charged. At the moment interest being charges is 17.9 percent, up from 2.3 percent. The Bank is not going to offer interest free overdraft protection any longer on the accounts unless the consumers accept the monthly fee option. Free banking has been very popular in the last few years, especially from consumer point of view. However the recent credit crunch issues have put a stop to these free accounts and now consumers are going to either pay interest or have to pay a monthly fee. These changes have been examined by the Financial Ombudsman Service. The FOS has seen 30 percent increases to complaints from bank account holders regarding these changes. In fact complaints to some banks have tripled because of the overdraft charges and it is now a new discussion for the High Court and the OFT. The OFT has been trying to change the overdraft charges on credit card accounts, and now it looks as though they will also be stepping in on the overdraft issues that have come about during the termination of the free banking. Other changes such as the maximum penalty for overdrafts are at 90 pounds and 88 pounds. If someone accidentally overdrafts or even does so on purpose the fee is so high they may never recover and continue to lose money. The good news is that the existing consumer will be able to keep the account they have in the way it was created. The bad news is if the existing account wasn’t free your options for a new account may be worse than what you have. Changing accounts is not a great option as the moment. Back To Financial News June 2008 100 Percent Mortgages |
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