finance
monthly
Personal Finance. Money. Investing.
Contribute
Newsletter
Corporate

Banks Made Nearly £10 Billion From Account Charges in 2017

Posted: 16th February 2018 by
Finance Monthly
Share this article

Average UK current account holder charged £152 last year in overdraft, FX, transaction and other fees, according to analysis from Plum.

Analysis of over 11,000 UK personal current accounts (PCA) has revealed that the average holder was charged £152 in bank fees last year which, if incurred by every one of the 65 million active current accounts in the UK, suggests banks made £9.9 billion from charges in 2017.

The data, collated by Plum, the automated money management chatbot, coincides with launch of its Fee Fighters function, a free tool that enables users to check in exactly what fees they are being charged by their banks. This functionality is made possible due to the implementation of Open Banking, which aims to encourage fair competition and comparison. The European-wide regulation orders banks and credit card companies to share a customer’s data with other regulated companies if requested to do so by a customer, removing the banks monopoly on customer data.

The average £152 paid per year by current account holders includes overdrafts, foreign exchange, and transactions fees, as well other unspecified fees, such as monthly account charges. This £152 average rises significantly when considering personal current accounts with an overdraft function. In this case, total bank charges were closer to £221 per current account holder with those that have at least 1 overdraft transaction per year.

In terms of what charges were applied by the banks, 56% were due to overdrafts, both from planned and unplanned usage. Foreign exchange fees accounted for 11% of the total charges, while late transaction fees made up 6%. Over a quarter, however, (27%) of the total charges were classed as “other” which included monthly account fee, unspecified bank fees, or bank subscriptions. Some of these charges can be fairly high, with an average of £5-£10 charged per bounced back transaction it is not uncommon for users to accumulate these charges without realising it, getting charges up to £75 in “Unpaid Transaction Fees”.

To help consumers be alerted to and understand the culprits of the charges, Plum has developed a free Fee Fighter tool, first of its kind that alerts users to fees. With the implementation of Open Banking, in the coming months Plum hopes to go beyond raising awareness about hidden fees and provide solutions, helping users to identify smarter deals and more cost effective products with alternative providers bespoke to their financial requirements. The tool uses TrueLayer, a secure FCA authorised service, to gain read-only access to a user’s bank account, Plums AI then processes the description of each bank transaction understanding what type of a fee it is and allocates it to a specified category. When banks hide fees in the description of the transaction rather than listing it as a separate line in the bank statement, Plum extracts the fee from the description itself.

Victor Trokoudes, CEO and co-founder of Plum, said: “For too long, banks have been guarding customer data, and have been purposely vague about the true cost of overdrafts, borrowing, and FX. But with Open Banking now a reality, people can see in real time what charges they are being asked to pay by the banks and therefore take control of their money to avoid paying them.

“Enabling people to take control is why we launched Plum and that’s why we’ve created Fee Fighter which, in less than five minutes, helps people find a better deal and avoid fees when it comes to banking. We want to help people stand-up to their banks and demand a competitive deal. The more people that switch, the more that banks will be forced to compete for their business and fight to retain loyal customers. This is just one of the ways that we’re helping people be better off.”

(Source: Plum)

About Finance Monthly

Universal Media logo
Finance Monthly is a comprehensive website tailored for individuals seeking insights into the world of consumer finance and money management. It offers news, commentary, and in-depth analysis on topics crucial to personal financial management and decision-making. Whether you're interested in budgeting, investing, or understanding market trends, Finance Monthly provides valuable information to help you navigate the financial aspects of everyday life.
© 2024 Finance Monthly - All Rights Reserved.
News Illustration

Get our free monthly FM email

Subscribe to Finance Monthly and Get the Latest Finance News, Opinion and Insight Direct to you every month.
chevron-right-circle linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram