Simon Read: Big banks have ways to make you pay through the nose
In a week when payday lenders have been put in the spotlight by regulators, it seems quite fitting for current accounts to come under scrutiny as well.
That's because, surprisingly, going into the red with your current account can actually be more expensive than turning to a high-cost short-term credit company.
And with the big banks charging a range of different fees and interest rates, it's nigh on impossible to calculate which may be better if you need a little extra cash for a few days.
For instance, a quick check of the overdraft deals offered on the main current accounts from the big four banks which dominate the marketplace reveals a few crucial, but confusing differences.
Barclays' Bank Account looks simple, with a charge of just 75p a day but no interest charged when you go into an agreed overdraft.
But how does that compare with HSBC's Bank Account which has no fee but charges 19.9 per cent interest when you go into the red?
Or would you be better off with a mix of the two, as NatWest and Lloyds offer on their leading accounts? (Both, incidentally, charge £6 a month plus interest topping 19 per cent.)
The answer is that the best account for you will depend on how you use it. How long will you be in the red, for instance? Could there be extra charges for standing orders being turned down? Do you get interest on credit balances which can be offset against the overdraft charges?
All these questions mean that it's impossible to work out easily which account is best – but get it wrong and the costs will quickly mount.
In fact, with the most expensive current account, going into the red without permission could cost an extra £183 a month. Researchers at Which? discovered the shocking variation between the most expensive and cheapest deals late last year. Even those dipping into an authorised overdraft for just a few days a month with the wrong account could end up £120 worse off a year.
That's why the Competition and Markets Authority needs to speed up its investigation and banks need to simplify their range of accounts and charges.
The more they fail to do so, the more it will appear that they've deliberately obfuscated the market to boost their profits. And that surely can't be the case?
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Weekly Money: Round-up of the personal finance stories you may have missed 24-28 November
Simon Read: Credit card companies are keeping you in debt with tricks like 0 per cent deals
Bargain Hunter: It isn't a deal breaker if you didn't have a retail spree on Black Friday
Simon Read: There may be trouble ahead for cohabiting couples who don’t make a will
10 tips for taking out a personal loan
- 1 School playground evacuated over 'unusually aggressive' grey squirrel
- 2 Hollywood actor Mickey Rourke beats opponent 33 years his junior in exhibition boxing match
- 3 Jennifer Lawrence scores first UK top 40 single with Hunger Games track 'The Hanging Tree'
- 4 Today was a bad day for renters, landlords, and democracy
- 5 'You should come to my house and eat cheeses with me': 4-year-old sends adorable love letter to girl at school
Obama: The only people with the right to object to immigration are Native Americans
Ukip says babies born to immigrants in the UK should be classed as migrants – which would include Nigel Farage’s own children
The young are the new poor: Sharp increase in number of under-25s living in poverty, while over-65s are better off than ever
David Cameron sets out immigration reforms: We should distrust Ukip and their 'snake-oil of simple solutions'
Ukip mocked after mistaking Westminster Cathedral – for a mosque
Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
iJobs Money & Business
Excellent Package: Austen Lloyd: EAST ANGLIA - SENIOR SOLICITOR LEVEL ROLE** -...
£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...
£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...
£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...
Day In a Page
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens