Costs, Charges & Penalties on Current Accounts Flashcards
When do T&C’s apply?
When money is deposited into a bank deposit account.
Do T&C’s entail cost, charges and penalties?
Yes
What is a deposit account
Current, savings or any other type of account that allows money to be deposited + withdrawn by the account holder.
Where are accounts recorded?
Bank books
What do balances show?
Balances are a liability for the bank - shows the amount owed by the banks to the customers.
Do banks charge for their service?
Some banks charge a fee for their service while others may pay the customer interest on the funds deposited.
Describe maintenance costs
May involve a fee or penalty if the account is overdrawn.
Are there special current accounts offered?
Yes - account holders must meet specific requirements or account conditions.
What are examples of the account conditions?
Minimum monthly deposit or direct debit.
Ensuring there is a minimum balance left in the account at all times.
How may the interest on these types of accounts be worked out?
Daily on the first few thousand pounds and interest will be paid monthly.
Are there similar special accounts available for under 18’s or students?
yes - they may however come with different T&C’s.
What is an example of charges?
UK Bank may charge £2 per month on a normal current account but £5 per month on an international current account.
What options are there if an account is temporarily overdrawn?
Arranged or Unarranged overdraft.
Is there a max running time on overdrafts?
Yes
Can a bank stop charging interest when an account is overdrawn?
Yes - additional fees may apply
What fees may apply to an overdrawn account?
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
What did the FCA announce in December of 2018 in relation to overdraft fees?
They plan to ban excessive overdraft fees
How is this to be achieved?
Fees to be charged at a single annual interest rate
Why should fees be clearly advertised?
To allow for the comparisons of products
What is the Annual Percentage Rate (APR)?
The official rate used for borrowing.
When did the new rules on overdrafts come into force?
April 2020
