A MARTIN Lewis fan has got over £1,200 from her bank because of “unfair” overdraft fees.
With a cost of living crisis clobbering household budgets, many might find themselves in the red while struggling to make their cash stretch.
Here’s what to do if you’ve been charged overdraft fees unfairly too
But if you fall into your overdraft, you’ll likely be slapped with sky-high fees by your bank.
The annual interest rate you’ll pay on your overdraft typically stands at 40% – that’s much higher than that compared to that of a typical credit card which is usually 18%.
Martin Lewis has previously called overdrafts a “danger debt” because of these fat charges.
But you could be eligible for compensation if you’ve been slapped with a fee – and are left in financial hardship.
Lenders have a responsibility to treat you fairly if you’re struggling financially to stop you from being pushed further into debt.
One Martin Lewis fan explained how she successfully got £1,200 back by arguing against “unfair” charges in the latest MoneySavingExpert newsletter.
The reader, named Sue, said that Santander was slapping her with overdraft fees that were taking her over her overdraft limit.
She wrote to Santander but they refused to give her money back.
“But I persevered and wrote to the ombudsman – and after 12 months, the money was credited to my account,” she said.
How do I know if I’ve been unfairly charged for bank overdraft fees?
1. The bank charges have caused you financial hardship
Lenders have a responsibility to treat you fairly if you’re struggling financially to stop you from being pushed further into debt.
So if you’re in financial hardship, it should be doing all it can to help you get back on your feet rather than making the situation worse.
According to the FCA, you’re considered to be in financial hardship if:
- You’re regularly failing to pay the even the minimum repayments on any borrowed cash,
- You have damaging marks on your credit file, such as for defaulted payments,
- Most of your income is going towards paying off the debt and you may have had to take out a loan to help pay for them,
- You’ve taken out a Debt Management Plan (DMP) or other debt solution such as an Independent Voluntary Agreement (IVA),
- You’ve been talking to a firm, such as a provider or charity, about taking out a debt management plan or how to get help.
It’s not likely to be enough that you only tick one of these boxes – you’ll need to meet a few of them for your complaint to be upheld.
You’ll also need to be able to back up each point with proof, such as letters and statements.
2. You asked for help from your bank but they didn’t offer you anything
If you were struggling to keep up with repayments and asked your bank for help and it didn’t offer you anything, then any subsequent charges may be unfair.
Reasons for not keeping up with the repayments include mental health problems, you’d just lost your job or were on maternity leave.
The bank should have realised that you’re in a vulnerable position and offered help.
You will need to provide proof that you spoke to your bank, what you told them and that they didn’t help you.
3. Your bank increased your limit to an unafforable level
You may also be able to argue that you were unfairly lent to if your bank upped your overdraft without you asking it to and you ended up with charges that you can’t keep up with.
Sara said: “I suggest you apply “the man down the pub” test. Imagine describing your situation to a stranger down the pub and you told them that your bank had raised your credit limit to £8,000 and you also tell them what you earned.
“If the other person is going look astonished, that’s a good complaint.
“If you have to spend a while explaining your situation and they look sympathetic rather than shocked at how your debt got too large, then your case may not be so good.”
you’ll need to then write to your bank to tell them how the charges affected you and worsened your financial situation.
MoneySavingExpert and Money.co.uk both have a free template you can use.
The bank then has eight weeks to look at your case and get back to you.