5 Ground Rules for Avoiding Bank Charges

18-Feb-2010

Make friends with your Bank

We're not suggesting that you invite your local bank manager over for a Sunday roast.  However, if you have a history of managing your money well and rarely exceed your overdraft limit, you'll have a much better chance of avoiding a charge on the rare occasion that this does happen.  

If you know that a one-off charge is likely to leave your account that will cause you to exceed your overdraft, don't just wait for the inevitable, get on the phone to your bank and explain the situation.  Take a reference number, or the name of the person that you spoke to, and you will then have a record of the fact that you gave the bank warning of the transaction going through.  There is no guarantee that the bank won't still charge you for exceeding your limit, but they are more likely to look favourably on your situation.

Actually read your bank statements

OK, so bank statements are not exactly stimulating bedtime reading, but if you take five minutes to open and read your statements when they arrive, you will get a much clearer idea of what you have been doing with your money.   Mistakes can sometimes be made by the bank, or by companies that you have direct debit arrangements with, that may result in you being charged twice or overcharged.

By noticing these mistakes in 'real-time', you can act before you either exceed your overdraft limit or have a payment fail.  You might also notice direct debits that should have been cancelled but that are actually still leaving your account.  Don't rely on the companies to ensure these direct debits have been cancelled correctly - it's not in their interests to be too vigilant!

Keep all of your paperwork

When you communicate with the bank by post to cancel direct debits and other agreements or change the terms of your overdraft, always keep a copy of the letter and make sure that it is dated.  When you open a new account or sign up for a new credit card, make sure that you file away the paperwork, because you have no guarantee that the bank or credit card will not lose that information.  

If you speak to a customer service representative at your bank, ask them for a reference number or some other way in which you can keep a record of the call.  This is in case you have asked for a service to be amended or cancelled and it is not done.  You can avoid being charged erroneously for banking errors by keeping a file of this type of communication so that you have proof if you should ever need it.