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Avoiding Penalty Charges
Banks and credit card companies are notorious for charging high penalty charges if you go over your overdraft limit, miss a credit card minimum payment or pay late:
- The Office of Fair Trading(OFT) have said that credit card penalty charges are too high and ordered banks and card companies to reduce the charges to £12.
- The OFT is carrying out an investigation into retail bank pricing during the course of which it will look at, among other things, current account charges. This is being delayed by court cases and it may well be 2009/10 or later before the outcome is known. In the meantime all requests for the refund of charges have been frozen, except in cases of genuine financial hardship. The Financial Ombudsman has also frozen cases as have most courts.
- However if you do get a penalty charge on your current account because you go over your overdraft limit you can still ask for it to be refunded. Your Bank must register your complaint and tell you what is happening with the court cases. The Which? website gives further information about how to do this and also keeps you up to date with what is happening.
- Try to get your account back within its agreed limits as soon as possible even if this means borrowing cash to pay into the account.
- If you aren’t able to get your account back within its agreed limits, charges can escalate with interest added on top (although you may be able to successfully challenge this eventually – see above).
- If you’re in serious financial difficulties, banks can freeze your account to prevent debts from accumulating. However, they may then demand that you repay your overdraft.
- If you’re having problems seek advice from your University Advice Centre or your nearest Citizens' Advice Bureau.
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| Talk to your Bank as soon as you can if you think you are going to exceed, or have exceeded your overdraft limits - don't bury your head in the sand. Seek help if you feel nervous about doing it yourself. |
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