UK: Supreme Court Rules Bank Charges Are Legal.

There are plenty of banks that offer no overdraft (i.e. if you don't have the funds, the bank will not clear the amount and pay it out)...there are also banks that have a set overdraft fee regardless of the amount of the overdraft...and there are banks that offer a percentage interest fee on the overdraft.  There are other options out there is you look for them.

We're talking about your money here people!  I'm not trying to be offensive when I say that we HAVE to take responsibility for our own money...it should be one of your top priorities in life.  No one is FORCING you to have a bank account period.  You could keep all your money in your sock drawer and pay everything in cash if you wanted to.  I learned the hard way to check all the terms and conditions of your banks policies, make sure you understand every single detail of how everything works...and check your bank account every single day so you know exactly how much money is in there, so you know immediately if any unauthorized charges appear, and so you know if/when a payment has/has not cleared. 

I'm sorry but I'm just baffled by how a person can "fight" a fee on an UNAUTHORIZED overdraft.  If the fee was £5,000, you can't really argue with it...you made an UNAUTHORIZED overdraft.  You spent money that you didn't have.  Why is this not a crime?  Because the banks choose to allow us to do this and make some money off it...probably the only reason it's not a crime.

Not everyone has an authorised overdraft.  I don't, for example.  If something were to go wrong and my paycheck wasn't deposited on time, my account would go overdrawn, and it wouldn't be my fault.  I get paid weekly and normally have about £40 in my current account at the end of my pay week, but that's not enough to cover my rent.  Nothing is going to convince me that anyone should be penalised for other people's errors.  Plus, some people have low incomes and need every penny of their money every month.  Not "sailing too close to the wind" isn't an option for many people.

But the operative word here is UNAUTHORISED. It is so easy to extend your limit.

I'm sorry but I'm just baffled by how a person can "fight" a fee on an UNAUTHORIZED overdraft.  

Again, I'm not saying there shouldn't be a fee, and I'm not saying I want the bank to cut me a break if I make a mistake and go into unauthorized overdraft.  What I want is for the fee to be PROPORTIONATE.  

We're not talking about people writing bad checks with criminal intent, we're talking about people going £20 into unplanned overdraft by mistake.

Not everyone has an authorised overdraft.  I don't, for example.  If something were to go wrong and my paycheck wasn't deposited on time, my account would go overdrawn, and it wouldn't be my fault.  I get paid weekly and normally have about £40 in my current account at the end of my pay week, but that's not enough to cover my rent.  Nothing is going to convince me that anyone should be penalised for other people's errors.  Plus, some people have low incomes and need every penny of their money every month.  Not "sailing too close to the wind" isn't an option for many people.

In that sort of case, I would expect you would ask your employer to pay the fees, as they were the reason why you incurred them.  I wouldn't expect the bank to just not charge them, though.  Just because it wasn't your fault doesn't mean the bank isn't right in charging you a fee if you violate their terms of not overdrawing the account.

My friend (in the US) wrote a rent check to her landlord and misplaced it.  She then wrote another check and told her landlord the original was misplaced (they were sitting in the landlord's car).  Guess what...she had dropped the first check in the car, and the landlord found it a few weeks later and cashed it.  So my friend was overdrawn by a ridiculous amount and had no idea until the bank called her.  She had to pay loads of fees and yes, it really wasn't her fault, but that's not the bank's problem, is it?  It's between her and the landlord.

Using every penny of YOUR money is fine...an unauthorized overdraft is not using your money...it's the bank's money.  As I said before, there are other options.  If you choose to stay with a bank when you don't like the overdraft policy, you are accepting that overdraft policy.  Don't like it, choose a different bank with a different policy.

Yes it is unfortunate when we have to pay for other people's mistakes (a paycheck not being deposited on time or whatever) but do you honestly think that the majority of people who overdraft do so due to an unfortunate mistake that is someone else's fault?  If you look at statistics, the majority of people who make unauthorized overdrafts do the same thing every month.  This is not a mistake.

Unauthorized by definition means you do not have permission to take the money, but you do anyway.  Some people are trying to make it sound as if we have a right to take money out of the bank when we don't have any money in the bank.  If you are doing something that is unauthorized, you should be prepared to pay fees that are nowhere near proportionate...as a consequence for doing something that is unauthorized, if nothing else.  Everyone is looking at it like this: "The bank is charging these ridiculous fees in order to get more money off us."  Maybe this is true but what if you look at it like this: "The bank is charging these ridiculous fees in order to deter people from doing this in the future because they don't want to have to pay the fees again."  

So ,I ask again, why do most banks allow unauthorised overdrafts if it's such a heinous act? Why not just bounce the cheque/payment? Answer: because it's more profitable to allow it and charge for it, and add more charges on top of the charges.

Tarnlover, who is making it sound like we have a right to take money out willy nilly? Everyone here has agreed the banks are allowed to charge for unauthorised borrowing, it's just the method/amounts that are in dispute.

Using every penny of YOUR money is fine...an unauthorized overdraft is not using your money...it's the bank's money.  As I said before, there are other options.  If you choose to stay with a bank when you don't like the overdraft policy, you are accepting that overdraft policy.  Don't like it, choose a different bank with a different policy.

Yes it is unfortunate when we have to pay for other people's mistakes (a paycheck not being deposited on time or whatever) but do you honestly think that the majority of people who overdraft do so due to an unfortunate mistake that is someone else's fault?  If you look at statistics, the majority of people who make unauthorized overdrafts do the same thing every month.  This is not a mistake.

Unauthorized by definition means you do not have permission to take the money, but you do anyway.  Some people are trying to make it sound as if we have a right to take money out of the bank when we don't have any money in the bank.  If you are doing something that is unauthorized, you should be prepared to pay fees that are nowhere near proportionate...as a consequence for doing something that is unauthorized, if nothing else.  Everyone is looking at it like this: "The bank is charging these ridiculous fees in order to get more money off us."  Maybe this is true but what if you look at it like this: "The bank is charging these ridiculous fees in order to deter people from doing this in the future because they don't want to have to pay the fees again."  

BINGO!

How about some flexibility, discretion, and human understanding from the bank?  If terms and conditions are violated due to error, the account holder didn't actually violate them, the person who made the error did.  The bank should be able to remove the charges if it's clear that the overdraft was in error and not due to dishonesty by the account holder.

Don't like it, choose a different bank with a different policy.

Are you being serious?  Show me a bank with a reasonable overdraft policy (non-punitive fees and a policy of discretion and understanding of errors beyond the control of the account holder) and I'll switch tomorrow.  But I think you'll find that no such bank exists.  They all have virtually the same policy, if you want an account you have no choice but to "accept" their unreasonable policies.  And your earlier suggestion that people who don't like bank policies should keep their money in a sock is utterly ridiculous.  Many companies will only pay by direct deposit these days.  Not having a bank account is not a viable option for most people. 

If you look at statistics, the majority of people who make unauthorized overdrafts do the same thing every month.  This is not a mistake.

Can you cite a source for that? 

Unauthorized by definition means you do not have permission to take the money, but you do anyway.  Some people are trying to make it sound as if we have a right to take money out of the bank when we don't have any money in the bank.  If you are doing something that is unauthorized, you should be prepared to pay fees that are nowhere near proportionate...as a consequence for doing something that is unauthorized, if nothing else.  Everyone is looking at it like this: "The bank is charging these ridiculous fees in order to get more money off us."  Maybe this is true but what if you look at it like this: "The bank is charging these ridiculous fees in order to deter people from doing this in the future because they don't want to have to pay the fees again." 

Rubbish.  Deterrence never works.  Obviously if people are routinely overdrawing as you claim then it doesn't work.  If an account holder overdraws every month due to bad money management decisions, then the bank should close their account.  Charging people who are obviously barely scraping by more and more and more and refusing to bend even when there are extenuating circumstances is usurious and wrong. 

So ,I ask again, why do most banks allow unauthorised overdrafts if it's such a heinous act? Why not just bounce the cheque/payment? Answer: because it's more profitable to allow it and charge for it, and add more charges on top of the charges.

Tarnlover, who is making it sound like we have a right to take money out willy nilly? Everyone here has agreed the banks are allowed to charge for unauthorised borrowing, it's just the method/amounts that are in dispute.

I never thought I'd say this, but I agree with Shahbanou 100%.  Why is it OK for banks to milk poor people for profit but having a spot of bad luck and going overdrawn as a result is a heinous crime? 

So ,I ask again, why do most banks allow unauthorised overdrafts if it's such a heinous act? Why not just bounce the cheque/payment? Answer: because it's more profitable to allow it and charge for it, and add more charges on top of the charges.

Tarnlover, who is making it sound like we have a right to take money out willy nilly? Everyone here has agreed the banks are allowed to charge for unauthorised borrowing, it's just the method/amounts that are in dispute.

Totally agree with this!

Would you really rather have a cheque bounce or pay their charges? They don't have to loan you the money and that is what that is - A high risk loan.

Of all those on here that think the charges are too high for UNAUTHORISED O/D, have you done something about it? Wrote a letter to the bank? Explored other possibilities? Wrote to your MP? What have you done about it?

Sorry if I sound negative but I just don't understand the problem.

No one is FORCING you to have a bank account period.  You could keep all your money in your sock drawer and pay everything in cash if you wanted to.

This isn't always true. I think every job I've had in the UK, an explicit requirement for getting that job was to have a UK bank account (there was no other way to be paid). I had to have a bank account to rent my flat. Some bills and charges can't really be paid except by debit card. I'm not saying it's impossible to live without a bank account, but it could prove so difficult that for all intents and purposes, yes, you are pretty much forced to have one if you want to have a job, pay rent, etc.

That being the case, I do think banks have a sort of civic responsibility here not to gouge people too much. Yes, personal responsibility, etc etc, but all I see is people asking for a sense of proportion.

Once when I deposited a US student loan check here, I saw that it cleared into my account a week later (actually cleared, not pending) and so I paid off a number of bills. A few days later, my bank withdrew all the loan money from my account! When I asked why they said it should not have been put in my account so quickly, before the funds actually transferred from the US. In other words: THEIR mistake. Yet they still made me pay the overdraft fee! They said I should have known that the check could never clear so quickly. That's just wrong.

Anyway, these days, I don't see where any bank gets off telling all of us to be more responsible with our money. If they have such a huge problem with overdrafts then they should let the checks bounce rather than profiting off people's mistakes or misfortune. And if they want such strict accountability in the system, then they shouldn't run to the taxpayers for millions to bail them out after their own risky behaviour crashed the global economy.

Everyone is looking at it like this: "The bank is charging these ridiculous fees in order to get more money off us."  Maybe this is true but what if you look at it like this: "The bank is charging these ridiculous fees in order to deter people from doing this in the future because they don't want to have to pay the fees again."  

Ho ho ho!  If you think the banks want to deter people from going into unauthorised overdraft, think again.  Banks earn around a third of their retail revenues from unarranged overdraft charges.

I expect the OFT is going to be reviewing its case and pursuing a different line of legal argument, which from what I understand the court has left that avenue open.

I disagree with banks allowing unauthorised overdrafts.  They should bounce the cheques or refuse the funds if necessary - not stick it to people in ridiculous charges not commensurate with costs.  Having cheques bounce or not being able to get money would certainly deter people from whoopsies, but that's not what the banks want at all.

So ,I ask again, why do most banks allow unauthorised overdrafts if it's such a heinous act? Why not just bounce the cheque/payment? Answer: because it's more profitable to allow it and charge for it, and add more charges on top of the charges.

Right.  According to tonight's BBC 6 O'clock news, banks made £2.6 billion (1/3 of their total profits) from overdraft fees last year, and those fees came from 20% of their customers.

Of all those on here that think the charges are too high for UNAUTHORISED O/D, have you done something about it? Wrote a letter to the bank? Explored other possibilities? Wrote to your MP? What have you done about it?

I called and spoke with the bank.  They were unimpressed by my position.

Unauthorized by definition means you do not have permission to take the money....  

As Liz (and others) said, nobody is arguing against this, it's the case where someone goes £10 into unplanned overdraft, and through the bank repeatedly trying to run the charge through, winds up charging the customer £200 or £300.  This is what's wrong.

For those of you on the other side of the argument, should there be a limit to what a bank can charge?  If I wrote a check that put me £10 into unplanned overdraft, is £50 too high a fee to be charged for that?  £500?  £5000?  At what point (if any) would you think the bank was in the wrong?

My point is how do you have the right to dispute ANYTHING when you have done something that is unauthorized?  Also how can you dispute something that you already agreed to?  You want to make a stand and make a difference, on't go to that bank. 

When you (as the customer) think you can choose what is a "fair" fee for doing something that is unauthorized...well I just don't get that. 

I guess maybe we all have different definitions of the word unauthorized.  To me...that's a bad thing and if you do something unauthorized, you should have to pay the consequence for that action.

I agree that the banks should not authorize these overdrafts (and there are banks that won't).  But if that was the case, you'd just be complaining about the late fees on all of your bills that didn't get paid on time (which could be even higher than the overdraft fee from the bank anyway, depending).

The bank says "You can overdraft your account if you want to but you're going to have to pay £400 in the end."  You sign the dotted line saying "OK."  Then you overdraft and complain because you are charged the £400 that you already knew you were going to be charged. 

I understand there are some true mistakes and most banks are willing to offer you a ONE TIME credit if your account has always been in good standing and you don't make a habit out of it.  In fact, when I was with Bank of America, they gave me a card the same day I opened my account that offered me a one-time credit of overdraft charges. 

Of all those on here that think the charges are too high for UNAUTHORISED O/D, have you done something about it? Wrote a letter to the bank?

Catch up, Bob!  Millions of people have done this!  It's what the case was all about!  

Another instance where this (unauthorised overdraft) happens frequently...Bank customer has a loan with the same bank as their current account, and the loan payments are taken direct debit from the current account.  Person loses their job, goes on strike, etc etc...can't afford to make a loan payment.  Ring - rings the bank.  (Or writes)  "Please bank, don't take my loan payment - I lost my job, etc - don't have the money, can't we negotiate something until I can sort something out here?"

Guess what?  Bank still takes the loan payment because the bank doesn't care, and the person is in unauthorised overdraft - which can often cause a domino effect on down into their other household bills and direct debits.

Good reason NEVER to have your current account at the same place that you owe money to (cause that bank is going to own you & all your wages given half a chance).