The myth of free banking
We all like to think we are getting a good deal. The availability of ‘free’ banking probably falls into this description, but in reality banking services are never free.
New research from Which? reveals that whilst we may not pay an explicit monthly fee for our bank accounts, they are far from free.
The combination of low credit interest, high overdraft charges and big fees on spending abroad means that banking services for UK customers can be significantly more expensive than if you were to pay a monetary amount for your account each month.
The Which? research looked at a fictional customer who went overdrawn due to two direct debits, which are both paid by the bank. They found that consumers could be spending as much as £1,140 a year on unauthorised overdraft charges if they bank with Santander.
Because every bank has a different methodology for charging their customers, it becomes very difficult to make a fair cost comparison between the different banking groups.
With the UK banks returning to profitability, it is important to remember where this profit comes from and take real care to avoid paying over the odds for the services provided by your bank.