Costs, Charges & Penalties on Current Accounts

Question 1

When do T&C’s apply?

Answer 1

When money is deposited into a bank deposit account.

Question 2

Do T&C’s entail cost, charges and penalties?

Answer 2

Yes

Question 3

What is a deposit account

Answer 3

Current, savings or any other type of account that allows money to be deposited + withdrawn by the account holder.

Question 4

Where are accounts recorded?

Answer 4

Bank books

Question 5

What do balances show?

Answer 5

Balances are a liability for the bank - shows the amount owed by the banks to the customers.

Question 6

Do banks charge for their service?

Answer 6

Some banks charge a fee for their service while others may pay the customer interest on the funds deposited.

Question 7

Describe maintenance costs

Answer 7

May involve a fee or penalty if the account is overdrawn.

Question 8

Are there special current accounts offered?

Answer 8

Yes - account holders must meet specific requirements or account conditions.

Question 9

What are examples of the account conditions?

Answer 9

Minimum monthly deposit or direct debit.

Ensuring there is a minimum balance left in the account at all times.

Question 10

How may the interest on these types of accounts be worked out?

Answer 10

Daily on the first few thousand pounds and interest will be paid monthly.

Question 11

Are there similar special accounts available for under 18’s or students?

Answer 11

yes - they may however come with different T&C’s.

Question 12

What is an example of charges?

Answer 12

UK Bank may charge £2 per month on a normal current account but £5 per month on an international current account.

Question 13

What options are there if an account is temporarily overdrawn?

Answer 13

Arranged or Unarranged overdraft.

Question 14

Is there a max running time on overdrafts?

Answer 14

Yes

Question 15

Can a bank stop charging interest when an account is overdrawn?

Answer 15

Yes - additional fees may apply

Question 16

What fees may apply to an overdrawn account?

Answer 16

Arranged - £1 for up to 20 days
Unarranged - £5 for up to 20 days
Paid Items Fees - £5 to £25 per item
Unpaid Item Fees - £10 to £25 per item
Overdrafts are capped at £95 to £150 per month

Question 17

What did the FCA announce in December of 2018 in relation to overdraft fees?

Answer 17

They plan to ban excessive overdraft fees

Question 18

How is this to be achieved?

Answer 18

Fees to be charged at a single annual interest rate

Question 19

Why should fees be clearly advertised?

Answer 19

To allow for the comparisons of products

Question 20

What is the Annual Percentage Rate (APR)?

Answer 20

The official rate used for borrowing.

Question 21

When did the new rules on overdrafts come into force?

Answer 21

April 2020