Bank Charges

Am I wrong in thinking that it is perfectly fair and just that the responsible are subsidised by the irresponsible. Am I being harsh in thinking mistakes should have consequences? According to a recent survey, I’m not.

Currently the big banks are making noises that if penalty charges are banned, other charges will have to go up or be introduced. A survey by moneysupermarket has found that most of us would prefer to stick with the penalty charges.

It’s true, there are some very vulnerable people who are hit by bank charges because of the incompetence of others. People who have cash flow problems because money does not get to them in time, and I have no problems about moves to protect these people. But these are in the minority of those hit by penalty charges. Many people reclaiming charges are living comfortable lifestyles with many luxuries like new cars and foreign holidays, and are living irresponsibly close to the limit of what they can afford.

One forum correspondent observed that it was difficult to know what charge would end up on your credit card statement when spending abroad. This is a false premise for many reasons: credit limits are limits, not targets. It’s obviously difficult a to work out a foreign currency transaction to the penny, but it’s actually fairly easy to come up with a rough figure based on the prevailing tourist rate. Allowing a few percent margin of error for the commission, plus leaving a safety margin at the top of your credit card and you should be fine. Or even, unreasonable of me to suggest it I know, ring your credit card company up and ask them what the charges are for foreign transactions, so you only need worry about the exchange rate. Another holidaymaker observed he went overdrawn while abroad because it was impossible to check his balance. Er- no it isn’t. Check your balance before you go and keep a tally. And if you are on a foreign trip 10 to 1 you earn enough to apply for an authorised overdraft just in case.

Banks allow limits higher than a few months salary, so if you’re treating your credit limit as a target rather than a buffer, it’s your own fault. And set up your overdraft before you need it if you want to avoid an “unauthorised overdraft charge”.

While I would be pleased that a number of vulnerable people will benefit from the anti-charges revolution, I can’t help feeling the biggest noises in this controversy are not from that section of society, but people who could avoid charges if they gave their finances a moments thought. People who suffer charges not through circumstances, but through irresponsibility and for whom charges are their just desserts. So largely speaking, the responsible will suffer, and the irresponsible will be in the majority of those that gain.

For more takes on this see this blog, this blog, and this column.

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