did you know?
A basic bank account doesn't let you go overdrawn, so you might be better off with one of these.
An overdraft is a way of borrowing money from your bank or building society, linked to your current account. You’re allowed to take out more money than you have in your account but they will probably charge you fees and/or interest.
If you go overdrawn you’ll usually have to pay:
- A high interest rate of 15-20% equivalent annual rate (EAR) or more
- A daily, weekly or monthly fee for the time you stay overdrawn.
Overdraft fees can mount up quickly. Always agree an overdraft in advance with your bank or building society; otherwise it will cost you much more. If you’re getting close to your limit, talk to your bank right away.
Find out more about overdraft fees and how to avoid them in Overdrafts. With some bank accounts you can go overdrawn without paying charges or interest - find out more in Choosing the right bank account.
Transaction fees if your overdraft is unauthorised
If you go over your authorised overdraft limit you may be charged for every cash withdrawal or cheque or card payment you make, even if the bank doesn’t allow the payment to go through. These fees can be £10-£25 for each transaction.
You might also be charged for refused Direct Debits and standing orders – see below.
Charges for refused Direct Debits and standing orders
If a Direct Debit or standing order is due to be paid and there’s not enough money in your account to cover it, the bank can refuse to make the payment and charge you. This can be as much as £25 each time a payment is refused.
Most current accounts charge for refused payments. ‘Jam jar’ accounts don’t charge penalties in this way, but normally charge a monthly fee instead.
To make sure you don’t get taken by surprise by Direct Debit payments, you could try using an app like the one below that helps you avoid rejected payments and penalties.
Download a Direct Debit reminder app from the Bacs website.
Monthly Maximum Charges
Current accounts now have a Monthly Maximum Charge (MMC) in place, which is the maximum amount you’d pay each month in fees, charges and interest on unarranged overdrafts. It doesn’t affect authorised overdrafts, and the amount varies depending on the bank or building society, and which current account you have.
Make sure you check what the MMC is with your current account so you know how much your overdraft is costing you
Cash machine (ATM) fees
In the UK, taking money out of a cash machine with your debit card is usually free.
However, there are some exceptions:
- Some convenience cash machines – especially ones inside small shops, on garage forecourts and in nightclubs – can charge up to £5 each time you withdraw money from them. They’ll tell you about the charges on screen before you take out the cash so that you can decide if you want to go ahead or not.
- Using a credit card to take out cash usually comes with a charge, and you pay interest from the date you withdraw the money - interest-free periods only apply to purchases.
- Some prepaid cards charge you a fee to withdraw money from cashpoint machines.
Foreign transaction fees
Banks charge fees of up to 3% for some foreign transactions, such as using your debit card to:
- Withdraw cash from cash machines
- Make purchases while you’re abroad
- Some might also add a currency conversion charge. This depends on your card – some are much more travel-friendly.
See Using cards cheaply abroad.
Same-day bank transfer fees
Most same-day bank transfers are free using the Faster Payment Service (FPS).
With most banks, you have to use CHAPS and pay a fee if you want to transfer very large amounts into an account the same day. A CHAPS transfer can cost you £25 to £30.
Check your bank's faster payments limits on the UK Payments Administration website.
Fees for one-off items
Each bank has a list of fees it charges for one-off items, such as:
- Special presentation of a cheque (finding out quickly if the cheque will be paid)
- Getting a banker's draft
- Getting copies of paid cheques
- Ordering duplicate statements
- Stopping a cheque, and
- Requesting a reference from the bank
These are usually between £3 and £30 – it varies from bank to bank. Your bank will tell you if there is a charge, and how much, when you ask for any of these items.
Will your bank’s fees ever change?
The fees can change, but your bank must give you notice.
Your bank or building society will tell you about their fees when you open your account. If there’s any change to the fees or terms and conditions of running your current or payment account, they have to tell you well in advance – usually two months. This notice period does not apply to all savings accounts or overdraft changes.
What to do if there’s a problem
Money fitness tip
Talk to your bank as soon as possible if you think you'll go over your limit. You might be able to arrange an extension or a higher limit. They may charge you a small fee, but it could save you more.
If you have a problem with fees and charges, talk to your bank:
- if you think the bank has got it wrong, give them a chance to put it right before you complain.
- if you think that the bank has charged you correctly but you don’t think you should pay, it’s still worth asking them to waive the charge.
If you are not satisfied with their response, you can make a formal complaint:
- make a note of everyone you speak to and what they say, as well as the dates and times of all your calls.
- put your complaint in writing, mark your letter as a ‘complaint’ and make it clear what you are complaining about and what you would like done.
- state your account number and sort code and provide any letters, papers or statements that explain the problem.
If you’re still not satisfied, you can complain to the Financial Ombudsman Service