Overdraft Charges Increase Credit Card Balances

In recent months the Office of Fair Trading has been working with the court to make several of the top credit card companies accountable for their overdraft charges. Consumers were supposed to be getting refunds regarding the overdraft charges because of the Office of Fair Trading’s concerns. Abbey, Barclay, Halifax, Lloyds, and Nationwide are still waiting for the judge to make the decision on the refunds and the overdraft charges.

The two sides of the court case when to high court in January to plead their case regarding unauthorized overdraft charges. The charges fall under the Unfair Terms in Consumer Contracts Regulations. With this court case more than ten thousand individuals are in a holding pattern regarding the unfair charges.

In July of 2007 the City Watchdog Financial Services Authority decided to place a hold on the complaints from consumers regarding valid bank charges for overdrafts. Prior to this hold the banks were paying back hundreds of pounds to consumers claiming they were charged for unauthorised overdrafts and that these charges were higher than necessary. The charges are accruing interest while the banks and OFT duke it out in court. All UK banks may be subject to these refunds, but those mentioned in the case were the top companies making these charges.

Success in previous years has offered a hint towards the actual outcome. In the past the OFT has been favoured by the court for rewards regarding unfair fees such as the default fee two years ago. While it is not an open and shut case, many are hoping the OFT wins. If they do not win it is more likely consumers will have to pay the charges associated with their accounts.

Many have placed their old accounts on hold until the dispute is resolved. This means that they will have debts sitting in these accounts if the court ruling is against them. However, if the consumers win these accounts will be closed and the refund will occur. It is best to clear off any debts you may have. This way there will not be an objection regarding the charges and you would be able to take advantage of these refunds if they occur.

The cases that are in part hardship related have been dealt with to make it easier for these individuals. If the case is not won you can still as the bank to legitimize the claim about the charges. They may not have to investigate though. If you are going to decide to be a hardship case the Banking Code Rules are going to apply to the decision. They have to be sympathetic to your case. This means that they must help to establish at least a repayment agreement that can work for you rather than work for the bank. This would also include stopping further charges from being applied to your account.

The report is due to be published later in the year regarding the decision from the court and the bank practices. This could still mean other changes if the banks lose the case.

Back To Financial News April 2008
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