Get MoneySavingExpert.com’s Bank Charge Claim Advice. (as seen on TV)

Unfortunately, bank charges seem to be a fact of life that is difficult to avoid. Many bank charges are hidden away in the small print or are unclear or misleading. However, there are some things you can do to avoid – or at least lower – your bank charges.

The average bank customer is paying bank fees and charges of around 400 pounds a year, according to a recent report by the Independent Banking Advisory Service. Much of this figure consists of charges that are misunderstood - or not noticed at all - on customers’ bank statements.

If you are shopping around for a current account, ask for a list of charges and details of when they will apply. Always ask if something is not clearly explained. Compare the features of different accounts – a large bank may offer a dozen different current account options with different benefits and fees.

The most common charges assessed by banks are for going overdrawn and not maintaining a minimum balance. Most banks also charge for other specialist services such as stopping payment on a cheque, back copies of bank statements or issuing a banker’s draft.

One of the most obvious ways to avoid charges is to not go overdrawn on your account unless you have overdraft protection – banks make most of their money from these charges. Around 14 million people are regularly overdrawn on their account, meaning a huge 10 billion pound profit for the banks.

The charges for going overdrawn can vary enormously – Alliance and Leicester has in the past and may still charge almost 8% while Barclay’s fees have and may still run to almost 16%. These fees are for authorised overdrafts – for overdrafts not previously authorised, the charges can be even higher. If you feel you are going to need to be overdrawn beyond your authorised limit, ring your bank and ask them for permission to do this, thus avoiding the higher charges.

Your bank may charge the interest on the full amount including your balance before you were overdrawn – if you are authorised to go 200 pounds overdrawn, but go 220 pounds overdrawn, you are charged interest on the full 220 pounds, rather than just the 200. The charges on bouncing a cheque can be prohibitive as well – up to 25 pounds a transaction.
Fees for using cash machines are another big source of income for most banks. Other than simply not using them, make sure you are only using machines owned by your own bank. Around 43% of all cash machines now incur a charge to withdraw money – usually one pound, 50 pence - and many people are actually confused as to whether a particular machine will incur a charge.

If you have to use other banks’ cash machines, try to withdraw enough money for your immediate needs so you won’t need to withdraw again, thus being charged yet again. Fees for using a cash machine overseas may be even higher.

You may incur fewer charges in general if you bank with an internet bank, rather than one of the traditional High Street banks. Because they have lower overheads they can generally afford to charge lower rates. As an example, the typical 50 pound charge for canceling or bouncing a cheque is usually less at an internet bank.

Finally, check your bank statement carefully when you receive it. Many people simply don’t notice or don’t bother to question charges that appear on their statement. Many fees may be simply indicated “fees” or “charges” and it isn’t clear what they are for.

Read more about ways to try and recover bank charges at Bankchargeshell.co.uk