As the banks continue to try and increase their fee income, more and more consumers are complaining about increased overdraft charges.  While everything is now legal and above board, many are still receiving a shock when they open up their bank statements.  As the economy moves downwards and money becomes tighter we will see more people double checking their statements!

So what can you do to reduce the total overdraft charge which appears on your statement? Did you know that many banks will give you a free overdraft – up to a certain limit – if you actually ask them?

The subject of overdraft fees is something which has caused major concerns over the last couple of years, and the banks are now very keen to get their fee structures back on track.  They have been advised that their fees should be more transparent, easier to understand and above all the fee should fit the service. 

Do you depend on your overdraft?

It seems that more and more people actually depend on their overdrafts to see them through each month, especially with Christmas fast approaching.   While a £5 fee per month on your overdraft may not seem an awful lot, when you consider you may be paying £60 for the year, on an overdraft which may be just a few of hundred pounds – does it really seem that economical?

For those with a regular income, and an overdraft which rarely goes over a certain limit, it may well be more worthwhile taking out a short term loan to pay off the overdraft.  The interest rate on the loan would be no where near the effective rate on your overdraft, so you would benefit from a more structured debt repayment plan, as well as reduced interest charges.  Now I bet the banks did not suggest that to you?