Unfair terms on new current accounts are worrying
Consumers need to check the small print of a new breed of "cashback" current accounts.
Consumer organisation Which? has voiced their concerns over the fees and charges attached to new current accounts.
In light of interest rates tumbling and the ongoing court battle with the OFT over unfair bank and overdraft charges, the banks are looking at ways to make money.
It seems these new bank accounts offer a range of cash bonuses eg bonuses if certain criteria are met each month as well as bonus incentives to open accounts.
However, anyone opening a new current account must check the small print before agreeing to open an account as overdraft charges are extremely high eg:
- Halifax Bank of Scotland – if you go overdrawn even with a prior arrangement facility it will cost you £5 a day for an unauthorised overdraft
- Alliance and Leicester – unauthorised overdraft charges £5 per day
Other banks have decided to offer discounts and free insurance in return for a flat fee in the region of £15 per month.
Phil Jones, head of money research at consumer group Which? commented: "It seems like a bit of a coincidence that while the OFT inquiry into the legality of bank charges rumbles on (which at present looks like the banks are going to lose and have to repay customers what they have unfairly charged them) that they are actually introducing a whole range of accounts with different charging structures".
The British Bankers Association believes that cash bonuses are simply a way of bank's gaining a competitive edge during the current economic climate.
But MPs are worried by these new incentives and are urging banks to spell out the true cost of these deals when selling them. If they fail to do this they could only be opening themselves up to further claims of hidden charges.
Banks are looking to build consumer's trust again, but by not being open, honest and transparent about charges in light of what is happening how are we supposed to trust them again?