MSE News: Bank charges higher than pricey payday loans

antrobus

blueberrypie wrote: »

The article talks about *unauthorised* overdrafts, but compares the charges on those to charges for *authorised* borrowing from payday loan companies. That's hardly fair, meaningful or constructive.

Not to mention the fact that it's all simply repeating a story that appeared in the Daily Mail last month, see http://www.dailymail.co.uk/money/article-1330318/The-46-450-869-bank-charge-overdrawn-Christmas.html

bank_leper

Well I was glad to see a story that wasn't blasting payday loans. Having realised I was going to go over my overdraft I asked the bank for help. They refused. I ended up, going over my limit by £19 ... because they bounced a direct debit of £10 ... and charged me £25.

The next month I then needed to pay the DD, and the charges ... and ended up spiralling into the territory of overlimit overdraft charges ... at the worst point they were charging me £195 a MONTH for being £150 over my limit...! Despite my best efforts I could not get out of this charge/go over scenerio. As such I called them and said HELP! I asked them to freeze their charges for one month which would enable me to stay under my agreed limit. They refused ... the computer said no..!!

As such I turned to payday loans for help. For the equivalent debt I pay £75 a month .. and hey presto my debts are increasing! The real irony is that the bank contacted me and told me that I shouldn't use payday loans...!!!! I told them that if they'd assisted instead of hindering then perhaps I wouldn't have needed to.

Now ... I'll go to a payday loan before the bank everytime. Their customer services are 100% better, there is less hassle, no patronising attitude, and best of all they say yes and charge me less.

The banks are out to rip you off at every turn. Payday loans are the only option for people who have hit problems and are trying to recover.

In reply to Anrtobus ... Having talked to quite a few payday lenders I checked what would happen if I did struggle to repay them ... NONE of them would charge the equivalent of £195 a month if I failed to repay and most were most a lot less condescending than the banks.

HSBC - £195 a month for being over overdraft.

antrobus

bank_leper wrote: »

As such I turned to payday loans for help. For the equivalent debt I pay £75 a month .. and hey presto my debts are increasing!

Can't see why you're so pleased about the fact that your debts are increasing.

bank_leper wrote: »

In reply to Anrtobus ... Having talked to quite a few payday lenders I checked what would happen if I did struggle to repay them ... NONE of them would charge the equivalent of £195 a month if I failed to repay and most were most a lot less condescending than the banks.

Very interesting, but I don't see how this quite changes the fact that the MSE article in question was (cough) 'inspired' by a previous report from the Daily Mail.

[Deleted User]

the nasty nasty banks....my "nationalised bank" allows me £100 interest free and £1000 i.e another £900 at 19%apr,i think the most ive ever had in charges to said bank in 36 years is £1.50,the fact that said bank allows me a free £100 o/d means i have no need for payday loans at 2900%apr,but i can see that for some people they have there use and if paid back promptly the cost isnt as bad as its made out.

JimmyTheWig

blueberrypie wrote: »

You mean the point is that authorised borrowing is often cheaper than unauthorised borrowing? Why would that be a surprise?

The surprise is that most people would guess that a payday loan (with their astronomical sounding APRs) would be the most expensive way to borrow.

Bill_Badger

Some good advice, but as someone who banks with the HSBC and has briefly gone over the agreed overdraft limit by about £90, be careful about raising your limit because they nobble you with an 'arrangement fee' when your yearly overdraft facility is 'reveiwed'.....

My case was perhaps common to a few of you - the month is just a few days longer than the interval between your salary going into the bank! As soon as we went over the overdraft limit, we were faced with a £25 fee for each direct debit. Luckily we noticed this happening and spoke to the bank. They were good enough to raise our limit by a couple of hundred as we asked, but they didn't tell us about the review fee that would follow. We picked up a charge of £50 for going over the limit - a £25 charge for the DD plus a £25 fee. I argued this amount and they gave me £25 back, but then I had to argue again for the £25 'review fee' some three months later. They did refund this amount, but only after a lengthy but good natured argument. I did threaten to take my account elsewhere, but realised that although they may lose money, I would have to cough up all of my overdraft......:eek:

No offence meant, but if you don't like talking to their call centre in Bombay, send a message via your online banking to register your gripe, and they will come back to you by letter with a response, a name and a direct phone number in the UK.

nomoneytoday

Surely if you know you will go overdrawn, then it makes sense to call your bank in advance.
If you "don't know" then by the time the overdraft occurs then a payday loan won't change that.

IMHO the post isn't comparing apples with apples.