Penalty fees see dramatic rise
(13 January 2006)

A stunning £553 million was paid out in penalty fees and charges by British credit card and bank account holders last year, research from MoneyExpert and Defaqto has discerned.

The average total payout in 2005 for making late or defaulted payments on credit cards or exceeding overdrafts was £70.70 – a remarkable 40 per cent increase on the figure of two years ago. Around 7.8 million UK citizens fell into the trap, with 1.7 million of them shelling out over £100 in fees last year.

It's not worth hammering another nail into your financial coffin by attempting to use money that your bank or card provider isn't even permitting you to have.

With bounced cheques costing on average £32 each, unpaid direct debits requiring a typical £31 fee and cash withdrawals when above your debit limit shedding you of £22 a time, it might be better to think of a cheaper means of tiding yourself over if you require cash urgently.

A payday loan doesn't require frequent trips to the cash machine and multiple painful penalty charges. With your cash advance of up to £1,000 incurring only a simple repayment of no more than £25 for every £100 borrowed, you're not at the mercy of your bank and can simply pay back the sum borrowed as soon as your paycheque arrives.

MoneyExpert's Sean Gardner said of the fees crisis: "This is a staggering figure, but it is understandable when put in the context that we are a busy nation who have less and less time to keep a close eye on our personal spending and have little time for financial planning."

The British Bankers' Association defended its members, saying the charges were necessary and a fair reflection of the costs incurred by missed payments and the like.



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