Understanding Bank Charges
Understanding Bank Charges
Bank charges are fees that your bank may apply for providing certain services or when specific conditions are met on your account. These charges can vary depending on your bank, the type of account you hold, and how you use your account. Understanding these fees – and your rights regarding them – can help you avoid unnecessary costs and better manage your finances.
Common Types of Bank Charges
Some of the most common bank charges include:
Monthly account fees: Some current accounts, especially those offering extra benefits like travel insurance or breakdown cover, may charge a monthly maintenance fee.
Overdraft fees: If you spend more than you have in your account (go into your overdraft), your bank may charge interest or a daily/weekly fee. Some banks also charge if you exceed your arranged overdraft limit.
Transaction fees: These can apply for certain transactions, such as making payments in a foreign currency, withdrawing cash abroad, or using another bank’s ATM.
Returned or unpaid item fees: If a payment (like a direct debit) can’t be processed because you don’t have enough funds, your bank may charge a fee.
Other service fees: Additional charges may apply for things like requesting paper statements, stopping a cheque, or replacing a lost card.
When and How Banks Can Apply Charges
Banks are regulated by UK law and must be transparent about any charges they apply. They are required to clearly outline all fees in your account’s terms and conditions at the time you open your account. The Financial Conduct Authority (FCA) oversees how banks treat customers and ensures that charges are fair and clearly communicated.
Banks can only apply charges that are set out in your agreement, and they must give you advance notice before introducing new fees or increasing existing ones. If you feel a charge is unfair or was not properly disclosed, you have rights under the Consumer Rights Act 2015, which protects consumers from unfair terms and practices.
The Importance of Checking Your Statements
It’s essential to check your bank statements regularly. This helps you spot any unexpected or incorrect charges quickly. If you notice a fee you don’t recognise, contact your bank immediately for an explanation. Prompt action can help you resolve issues faster and, in some cases, recover money if a charge was applied in error.
Charges Linked to Account Types or Services
Some charges are specific to certain types of accounts or optional services. For example, packaged accounts may have higher monthly fees but offer extra benefits. Basic bank accounts, on the other hand, typically have fewer fees and are designed for people who want simple, everyday banking. When opening a bank account, it’s important to compare the different fees and charges to find an account that suits your needs.
Can You Avoid Bank Charges?
Many bank charges are avoidable with careful account management. Here are some practical tips:
Stay within your arranged overdraft limit or avoid using your overdraft if possible.
Choose an account with no or low fees if you don’t need extra services.
Set up alerts to warn you when your balance is low or a payment is due.
Review your account terms regularly to stay updated on any changes to charges.
If you’re thinking about closing a bank account, make sure you understand any final charges that may apply, such as outstanding overdraft interest or early closure fees.
Understanding how bank charges work – and your rights as a consumer – can help you avoid unnecessary costs and take action if you believe you’ve been charged unfairly. For more information about your legal protections, visit the Consumer Rights Act 2015. To learn more about how banks are regulated, see the Financial Conduct Authority (FCA).
Common Types of Bank Charges
Common Types of Bank Charges
Understanding the different types of bank charges is important for managing your finances and avoiding unexpected costs. In the UK, banks and building societies are regulated by the Financial Conduct Authority (FCA), which sets rules to ensure charges are fair, transparent, and communicated clearly to customers. Here are some of the most common bank charges you might encounter:
Monthly Account Maintenance Fees
Some current accounts, especially those offering extra benefits like travel insurance or breakdown cover, charge a monthly maintenance fee. These fees typically range from £2 to £20 per month, depending on the account type and the services included. Banks must clearly state these charges in their terms and conditions, and you should be told about them before you open an account or if the fee changes.
Overdraft Fees and Charges for Going Over Your Limit
If you use an arranged overdraft (an agreed facility that lets you spend more than you have in your account), you’ll usually pay interest on the overdrawn amount. Since April 2020, UK banks have been required by the FCA to charge a single annual interest rate (APR) on overdrafts, rather than a mix of fees and daily charges. This move was designed to make costs clearer and prevent excessive charges.
If you go over your arranged overdraft limit or use an unarranged overdraft, you may face higher interest rates or additional fees. Some banks also charge for each transaction that takes your account further over the limit. These practices have been the subject of legal and regulatory scrutiny in recent years. For more on the legal landscape, see this detailed overview of overdraft fees.
Charges for Returned Payments or Unpaid Items
If a direct debit, standing order, or cheque cannot be paid because you don’t have enough money in your account, your bank may refuse the payment and charge you a fee. These are often called “returned item” or “unpaid transaction” fees. The amount varies by bank, but FCA rules require that these charges are proportionate and clearly explained in advance. Some banks have reduced or removed such fees in response to regulatory pressure.
ATM Withdrawal Fees and International Transaction Fees
Most cash withdrawals from UK ATMs are free, but you may be charged if you use a machine not operated by your bank, or if you withdraw cash abroad. International transaction fees can also apply when you use your debit card for purchases outside the UK, typically as a percentage of the amount spent. Always check your bank’s fee schedule before travelling or using unfamiliar ATMs.
Charges for Additional Services
Banks may charge for extra services such as requesting paper statements, stopping a cheque, or obtaining copies of old documents. Fees for these services should be listed in your account’s terms and conditions. If you need a special service, ask your bank about any charges in advance to avoid surprises.
Bank charges must be fair and transparent under the FCA’s rules. If you believe a charge is unfair or incorrect, you have the right to challenge it. The Financial Conduct Authority (FCA) oversees how banks treat customers and has set out clear priorities to protect consumers. If you’re unsure about any charges or want to dispute a fee, contact your bank first. If you’re not satisfied with their response, you can escalate your complaint to the Financial Ombudsman Service.
For more advice on managing your account and resolving disputes, explore our related topics on financial rights and complaint procedures.
Are Bank Charges Fair and Legal?
Are Bank Charges Fair and Legal?
Banks in the UK are required to follow strict rules when applying charges to your account. These rules are designed to ensure that all fees are fair, clearly explained, and not misleading. One of the key legal frameworks covering this area is the Payment Services Regulations 2017, which set out important transparency requirements for banks and other payment service providers. This means banks must tell you, in plain language, what charges you might face and when they could apply.
The Financial Conduct Authority (FCA) is the main regulator overseeing how banks set and communicate their fees. The FCA requires banks to be upfront about all charges, including overdraft fees, monthly account fees, and charges for late payments. Banks must provide you with clear terms and conditions when you open an account or take out a loan, so you know exactly what to expect.
If a bank introduces a new fee or changes an existing one, they must let you know in advance – usually at least two months before the change takes effect. This gives you time to review the changes and decide if you want to continue with the service.
Sometimes, customers find charges on their statements that they did not expect or believe are unfair. If a bank fee was not properly disclosed, or if you feel the charge is excessive compared to the actual cost to the bank, you may have grounds to challenge it. The law protects consumers from unfair or hidden charges, and you have the right to question any fee you believe does not meet the required standards.
To protect yourself, always read your account’s terms and conditions carefully. Make sure you understand what charges may apply and under what circumstances. This can help you avoid unexpected fees and spot any mistakes quickly.
If you do find a charge that seems unfair or incorrect, don’t hesitate to raise the issue with your bank. If you’re not satisfied with their response, you can find guidance on how to escalate your concerns on our banking complaints page. Taking these steps can help you ensure that your rights are respected and that all charges on your account are both fair and legal.
How Bank Interest Works
How Bank Interest Works
Interest is the amount of money a bank pays you for saving with them, or charges you when you borrow. Understanding how interest works can help you make better financial decisions, whether you’re saving, taking out a loan, or using an overdraft.
Interest on Savings
When you deposit money into a savings account, the bank pays you interest as a reward for keeping your money with them. This is usually shown as an annual percentage rate (APR) or annual equivalent rate (AER). The higher the rate, the more you’ll earn over time.
Interest on savings can be calculated in two main ways:
Simple interest: Calculated only on your original deposit.
Compound interest: Calculated on your original deposit plus any interest already earned. This means your money can grow faster over time, as you earn interest on both your savings and the interest already added.
Interest on Loans and Overdrafts
When you borrow money – such as through a loan, credit card, or overdraft – the bank charges you interest. This is the cost of borrowing and is usually shown as an APR. The amount you pay depends on the rate, how much you borrow, and how long you take to repay.
Loans: Interest can be fixed (stays the same throughout the loan) or variable (can change over time). For more information on how interest applies to home loans, see our section on mortgages.
Overdrafts: Using your overdraft means borrowing money from your current account. Overdraft interest rates are often higher than those for loans or credit cards, making them an expensive way to borrow. For practical advice and the latest rules, see Overdraft.
How Interest is Calculated
Banks use different methods to calculate interest, so it’s important to check the terms before you save or borrow. The main methods are:
Simple interest: Calculated only on the amount you originally deposited or borrowed.
Compound interest: Calculated on the original amount plus any interest that has been added previously.
For example, if you have £1,000 in a savings account with 2% compound interest, you’ll earn £20 in the first year. In the second year, you’ll earn interest on £1,020, and so on.
Interest Earned vs. Interest Charged
The key difference is:
Interest earned: Money you receive from the bank for saving.
Interest charged: Money you pay to the bank for borrowing.
Interest rates for borrowing (like loans and overdrafts) are usually higher than rates for savings. This is how banks make a profit.
Why Overdraft Interest Rates Are Higher
Overdrafts often have higher interest rates because they are a form of short-term, flexible borrowing. Banks may charge more because overdrafts are easy to access and often used without much planning. If you’re struggling with overdraft fees or charges, Overdraft offers helpful guidance on your rights and what you can do next.
Changes in Interest Rates
Banks can change their interest rates at any time, which can affect how much you pay or earn. For borrowers, a rate increase means higher repayments; for savers, a rate rise means more interest earned. Always check your account terms and keep an eye on any notifications from your bank about rate changes.
Your Rights and What to Do If You’re Unhappy
If you believe you’ve been charged the wrong interest rate or your bank hasn’t followed the correct process, you have rights under UK law. The Consumer Credit Act 1974 protects consumers who borrow money, setting out rules for how interest must be disclosed and limiting unfair practices.
If you think your lender has acted unfairly, you can find out more about your options and how to make lender complaints.
Understanding how bank interest works can help you avoid costly mistakes and make the most of your money. If you need more advice, explore the links above or speak to a financial expert.
Interest on Loans and Overdrafts
Interest on Loans and Overdrafts
When you borrow money from a bank – whether through a personal loan, credit card, or overdraft – interest is usually charged on the amount you owe. Understanding how this interest works is key to managing your repayments and avoiding unexpected costs.
How Interest Is Charged
For most loans and overdrafts, interest is calculated as a percentage of the outstanding balance. This means the more you owe, the more interest you’ll pay. With loans, interest is typically added to your monthly repayments, while for overdrafts, interest is often charged daily and added to your account balance.
If you miss payments or only pay the minimum required, unpaid interest can accumulate. This means you could end up owing more over time, as interest is added to the total debt and future interest is then calculated on this higher amount. This is sometimes referred to as “compounding interest.”
Types of Interest Rates
Banks generally offer two main types of interest rates on loans and overdrafts:
Fixed interest rates: The rate stays the same throughout the agreed term, so your repayments remain consistent. This makes budgeting easier, as you’ll know exactly what you need to pay each month.
Variable interest rates: The rate can go up or down, usually in line with changes to the Bank of England base rate or other market factors. This means your repayments could increase or decrease over time.
To see practical examples and more details on how these rates work, you can refer to the fixed and variable interest rates guide from Bank of Scotland.
Why Your Loan Agreement Matters
Before taking out a loan or using an overdraft, it’s crucial to read your loan agreement carefully. This document should clearly state:
The interest rate (and whether it’s fixed or variable)
How and when interest will be charged
Any fees for missed or late payments
What happens if you don’t keep up with repayments
The Consumer Credit Act 1974 provides important protections for borrowers in the UK. It requires lenders to explain interest rates, charges, and your rights in a clear and understandable way. If you’re unsure about any part of your agreement, don’t hesitate to ask your bank for clarification.
What If You Think Interest Has Been Charged Incorrectly?
Mistakes can happen, and sometimes banks may apply the wrong interest rate or calculate charges incorrectly. If you spot an error or believe you’ve been charged unfairly, it’s important to act quickly. You can find out how to raise concerns and resolve issues on our banking disputes and errors page.
Understanding how interest is applied to your loans and overdrafts can help you avoid unnecessary costs and stay in control of your finances. If you want to know more about your rights as a borrower, the Consumer Credit Act 1974 is a useful resource.
Interest on Savings Accounts
Interest on Savings Accounts
When you deposit money into a savings account, your bank pays you interest as a reward for keeping your funds with them. This interest is calculated as a percentage of your balance and is usually paid either monthly or annually. The amount you earn depends on the interest rate set by your bank and how long you leave your money untouched.
How Interest Is Earned
Interest on savings accounts is typically calculated daily based on your account balance. The bank will then pay this interest into your account at regular intervals – often monthly or annually. For example, if you have £1,000 in a savings account with a 3% annual interest rate, you could earn £30 over a year, assuming the rate stays the same and you don’t withdraw any money.
Some accounts offer compound interest, which means you earn interest not just on your original deposit but also on any interest previously added to your account. This can help your savings grow faster over time.
Impact of Interest Rates on Your Savings
The interest rate offered by your bank directly affects how quickly your savings grow. Higher rates mean you earn more on your balance. However, interest rates can change, especially if you have a variable rate account. The rates banks offer are often influenced by the Bank of England Base Rate, which is reviewed regularly and can go up or down depending on economic conditions.
It’s a good idea to keep an eye on interest rate changes. If your bank lowers its rate, you might want to look for a better deal elsewhere.
Tax on Savings Interest
Interest you earn on your savings is generally considered taxable income in the UK. However, most people can earn some interest tax-free thanks to the Personal Savings Allowance. For basic rate taxpayers, the allowance is £1,000 per year; for higher rate taxpayers, it’s £500. Anything above these limits may be subject to income tax.
The rules about how savings interest is taxed are set out in the Income Tax (Earnings and Pensions) Act 2003, Section 15, which provides detailed guidance on what counts as taxable savings income and how it should be reported.
Comparing Savings Accounts
Not all savings accounts are the same. Some offer higher interest rates, while others may have restrictions on withdrawals or require you to lock your money away for a set period. To make the most of your savings, it’s important to compare different accounts and look for the best interest rates and terms that suit your needs.
You can also consider whether you want a fixed-rate account, which guarantees a certain rate for a set period, or a variable-rate account, which can change over time. Always check the terms and conditions before opening a new account.
By understanding how interest works, keeping an eye on changing rates, and staying informed about tax rules, you can make smarter decisions and help your savings grow.
What To Do If You Believe Charges Are Unfair or Incorrect
If you notice unexpected or incorrect charges or interest on your bank account, it’s important to act quickly to protect your rights and finances. Here’s what you should do:
1. Check Your Statements and Gather Evidence
Start by reviewing your recent bank statements carefully. Look for any charges or interest rates that seem higher than expected, or fees you don’t recognise. Make a note of the date, amount, and description of each questionable item. Keep copies of your statements and any related correspondence, as these will be useful if you need to escalate your complaint.
2. Contact Your Bank
The first step is to contact your bank directly. You can do this by phone, online, or by visiting a branch. Explain clearly what you believe is wrong and ask for an explanation or correction. Sometimes, charges are due to misunderstandings or errors that the bank can resolve quickly. Make sure to keep a record of all communications, including dates, times, and the names of staff you speak to.
For more detailed advice on how to approach this, see our guide on making a bank complaint.
3. Escalate Your Complaint if Needed
If you’re not satisfied with the bank’s response, you have the right to escalate your complaint. All UK banks must have a formal complaints process. You can ask for your complaint to be reviewed by a senior member of staff or the bank’s complaints team. Make sure to follow up in writing and keep copies of all correspondence.
You can also learn more about how to handle banking disputes and errors, including what to do if the bank refuses to correct the issue.
4. Contact the Financial Ombudsman Service
If your bank does not resolve your complaint to your satisfaction within eight weeks, or if you receive a final response you’re unhappy with, you can take your case to the Financial Ombudsman Service. This is a free and independent service that helps resolve disputes between consumers and financial businesses. They can investigate your complaint and, if they find in your favour, can order the bank to put things right.
5. Know Your Legal Rights
UK law offers important protections for consumers dealing with banks. The Consumer Rights Act 2015 sets out your rights when buying goods and services, including financial services. Under this law, services provided by banks must be performed with reasonable care and skill, and any terms (such as fees or interest rates) must be fair and transparent.
6. Keep Records
Throughout the process, keep detailed records of all your interactions with the bank and any other parties involved. This includes copies of letters, emails, and notes from phone calls. Having a clear paper trail can make a big difference if your complaint needs to go to the Financial Ombudsman Service or if you need to refer to your rights under the Consumer Rights Act 2015.
By following these steps, you can make sure your concerns about unfair or incorrect bank charges are taken seriously and resolved properly. If you need further help, explore our guides on making a bank complaint and banking disputes and errors, or visit the Financial Ombudsman Service for independent support. To better understand your rights, see the Consumer Rights Act 2015.
Managing Your Bank Charges and Interest
Managing Your Bank Charges and Interest
Managing your bank charges and interest is key to keeping your finances healthy and avoiding unnecessary costs. Here are some practical steps you can take to reduce or avoid charges, manage your overdraft more effectively, and choose the right account for your needs.
Tips to Avoid or Reduce Bank Charges
Bank charges can quickly add up, especially if you go overdrawn or miss payments. To help minimise these costs:
Stay within your agreed limits: Always try to keep your account in credit or within your authorised overdraft limit. Exceeding your limit can result in extra fees and higher interest rates.
Check your statements regularly: Monitoring your account helps you spot any unexpected charges or errors quickly, so you can address them before they escalate.
Set up alerts: Many banks offer text or email alerts to let you know when your balance is low or a payment is due, helping you avoid accidental overdrafts or missed payments.
Managing Overdrafts to Minimise Interest and Fees
Overdrafts can be helpful for short-term borrowing, but they often come with high interest rates and fees. Here’s how you can manage them wisely:
Use authorised overdrafts only: Unauthorised overdrafts usually attract much higher charges. Always arrange an overdraft with your bank if you think you’ll need one.
Repay as soon as possible: The longer you stay overdrawn, the more interest you’ll pay. Try to pay back any overdraft quickly to minimise costs.
Understand your overdraft terms: Since April 2020, UK banks must charge a simple annual interest rate (EAR) on overdrafts and are banned from fixed daily or monthly fees. Make sure you know your bank’s rates and any associated charges.
Choosing Accounts with Favourable Terms
Some accounts offer lower fees or better interest rates than others. When considering a new account, compare the features carefully:
Look for accounts with no or low monthly fees: Some basic or standard accounts don’t charge monthly fees and offer free everyday banking.
Consider interest rates on overdrafts and balances: If you use an overdraft regularly, choose an account with a lower overdraft rate.
Review account features: Some accounts offer grace periods or fee-free buffers on overdrafts, which can help you avoid charges.
If you’re thinking about changing your account, see our guide on opening a bank account for more information on what to look for.
The Importance of Budgeting and Monitoring
Good budgeting is essential for avoiding unnecessary bank charges. By planning your spending and tracking your income and outgoings, you can:
Ensure you have enough funds to cover bills and regular payments.
Avoid going overdrawn and incurring charges.
Spot any unusual transactions or mistakes quickly.
Simple steps like keeping a spending diary, using budgeting apps, or setting up standing orders for regular payments can make managing your account much easier.
Stopping Unwanted Payments
Unwanted subscriptions or recurring payments can lead to unexpected charges, especially if you forget about them or they push you into your overdraft. If you need to stop a payment from leaving your account, follow our guide to stopping future automatic payments. Taking action early can help you avoid further charges and keep better control of your finances.
By staying informed and taking these practical steps, you can keep your bank charges and interest to a minimum, avoid surprises, and make the most of your money. If you believe a charge is unfair or incorrect, don’t hesitate to contact your bank to discuss or dispute it.
Related Issues and Further Help
Understanding bank charges and interest is just one part of managing your finances effectively. Several related issues can affect how charges are applied, what your rights are, and how to respond if problems arise. Exploring these topics can help you avoid unnecessary fees, spot potential problems early, and take action if you feel something isn’t right.
Unusual or Unexpected Charges:
If you notice charges on your account that you don’t recognise, it’s important to consider the possibility of banking fraud, scams and security. Fraudulent activity can sometimes appear as unexplained fees or withdrawals. Learn how to identify suspicious transactions, what to do if you suspect fraud, and the steps your bank must take to protect your money.
Account Restrictions and Disputes:
Unpaid charges or ongoing disputes with your bank can sometimes lead to your account being restricted or even frozen. This can impact your ability to access your funds and manage day-to-day expenses. For more on why this happens and what you can do if it affects you, see our guide to frozen and blocked accounts.
Other Financial Penalties:
Bank charges often sit alongside other types of financial penalties, such as late payment fees or penalty charges from service providers. Understanding the difference between standard bank fees and fines and penalty charges from other organisations can help you challenge unfair costs and manage your finances more confidently.
Your Broader Banking Rights:
Bank charges and interest are governed by rules set out in the Consumer Credit Act 1974, the Financial Services and Markets Act 2000, and guidance from the Financial Conduct Authority (FCA). These rules cover transparency, fairness, and the right to challenge charges you believe are incorrect or excessive. To get a fuller picture of your rights and responsibilities as a bank customer, visit our main banking page.
Taking Control of Your Finances:
By exploring these related topics, you’ll be better equipped to spot problems early, resolve disputes with your bank, and protect yourself from unnecessary charges or financial loss. If you’re facing issues with bank charges, interest, or related problems, taking the time to understand your rights and the wider context can make a real difference.
Banking Complaints and Disputes
Banking Complaints and Disputes
If you believe your bank has charged you unfair fees or applied incorrect interest, it’s important to know your rights and the steps you can take to resolve the issue. UK banks must follow strict rules set out by the Financial Conduct Authority (FCA), which require them to treat customers fairly, provide clear information about charges, and handle complaints properly.
How to Raise a Complaint
Start by contacting your bank directly. Clearly explain the issue, whether it’s an unexpected charge, excessive interest, or a mistake on your account. Banks are required to respond to complaints promptly – usually within eight weeks. Make sure to keep a record of your communications, including dates, names of people you spoke with, and copies of any letters or emails.
If you need more guidance on the process, you can find detailed advice on our banking complaints page.
Understanding the Dispute Resolution Process
If your bank does not resolve your complaint to your satisfaction, or if you do not receive a response within eight weeks, you have the right to escalate the matter. The next step is to refer your case to the Financial Ombudsman Service (FOS), which is an independent body set up to settle disputes between consumers and financial institutions. The FOS can look at issues such as unfair charges, misapplied interest, or errors in how your complaint was handled. Their decisions are binding on the bank if you accept their outcome.
It’s important to gather all relevant documents before you escalate your complaint, including statements, correspondence, and any evidence of the charges or interest in question.
For more information about common issues and how to resolve them, see our section on banking disputes and errors.
Practical Tips
Always check your bank statements regularly to spot any unexpected fees or interest charges.
Act quickly if you notice a problem – some banks have time limits for raising disputes.
If you’re struggling to understand a charge or the bank’s explanation, ask them for a clear breakdown in writing.
Remember, banks must follow the FCA’s rules on treating customers fairly and providing transparent information about charges.
Knowing your rights and following the proper complaints process can help you get a fair outcome if you face issues with bank charges or interest. If you need further support, the Financial Ombudsman Service is there to help resolve disputes when direct communication with your bank hasn’t worked.
Protecting Yourself from Fraud and Scams
Protecting Yourself from Fraud and Scams
Unusual or unexpected bank charges can sometimes be the first sign that your account has been targeted by fraudsters. If you notice charges you don’t recognise – such as unfamiliar direct debits, payments to unknown companies, or sudden increases in fees – it’s important to act quickly. Under UK law, including the Payment Services Regulations 2017, banks are required to protect your money and refund unauthorised transactions unless you have acted fraudulently or with gross negligence.
How to Spot Fraudulent Bank Charges
Fraudulent charges often appear as small, unexplained transactions, which criminals use to test if your account is active before attempting larger withdrawals. You might also see charges from companies you’ve never dealt with, or multiple small payments in quick succession. Always review your bank statements carefully and set up alerts for account activity where possible.
Tips for Spotting and Avoiding Bank Account Scams
Scams related to bank accounts can take many forms, from phishing emails and texts to phone calls pretending to be from your bank. Here are some practical steps to protect yourself:
Never share your PIN, password, or full security details with anyone – even if they claim to be from your bank.
Beware of urgent requests for payments or personal information. Scammers often create a sense of urgency to pressure you into acting quickly.
Check for spelling mistakes or unusual sender addresses in emails or texts, which can indicate a scam.
Don’t click on suspicious links or download attachments from unknown sources.
Verify requests for bank details by contacting your bank directly using official contact information.
For further advice, see our spotting and avoiding scams expert tips.
What to Do if You Suspect Fraud
If you believe your bank account has been compromised or you spot an unauthorised charge:
Contact your bank immediately. Most banks have 24-hour helplines for reporting fraud. They can freeze your account to prevent further losses.
Check your recent transactions and make a note of any suspicious activity.
Report the incident to Action Fraud, the UK’s national reporting centre for fraud and cybercrime. They provide practical advice and support for scam victims.
Keep records of all communication with your bank and any reference numbers you receive.
Under UK law, your bank must investigate your claim and refund unauthorised payments promptly, unless they can prove you authorised the transaction or acted negligently. If you’re unhappy with your bank’s response, you may be able to escalate your complaint to the Financial Ombudsman Service.
For more information on staying safe and understanding your rights, visit our page on banking fraud, scams and security.
Staying alert and informed is the best way to protect yourself from fraudulent bank charges and scams. Always question unexpected activity, and don’t hesitate to seek help if something doesn’t seem right.
Other Related Banking Topics
Other Related Banking Topics
Understanding how bank charges and interest affect other areas of your finances can help you avoid unexpected costs and manage your accounts more effectively. Below, we explore how these charges relate to mortgages and other loans, what can happen if charges lead to account closures or frozen accounts, and practical steps you can take to manage or stop unwanted payments.
How Bank Charges and Interest Affect Mortgages and Loans
Bank charges and interest rates play a significant role in the total cost of borrowing. When you take out a loan or a mortgage, the interest rate determines how much you pay back on top of the amount borrowed. Even small changes in interest rates can make a big difference to your monthly payments and the overall cost of your mortgages or personal loans.
In addition, missed payments or unauthorised overdrafts can lead to extra charges, which may increase your debt and affect your credit score. These additional costs are regulated under laws such as the Consumer Credit Act 1974, which sets out your rights and the obligations of lenders when it comes to interest and fees on credit agreements.
Account Closures and Frozen Accounts Linked to Unpaid Charges
If you fall behind on payments or accumulate unpaid bank charges, your bank may take steps such as closing a bank account or freezing your account. This can happen if your account remains overdrawn for a long period, or if you fail to resolve disputes over charges. A frozen account can prevent you from accessing your money or making payments, which can cause further financial difficulties.
For more information on the reasons banks may freeze or block accounts, and what you can do if this happens, see our section on frozen and blocked accounts.
Managing Payments and Stopping Unwanted Charges
To avoid unexpected fees, it’s important to regularly check your bank statements and understand the terms of your account. If you notice charges you don’t recognise, contact your bank immediately to dispute them. If you have set up recurring payments, such as direct debits or standing orders, and want to prevent future charges, you have the right to cancel these payments. Learn more about the process for stopping future automatic payments to help you stay in control of your finances.
If you believe you have been charged unfairly or your complaint is not resolved by your bank, you can escalate the issue to the Financial Ombudsman Service. They offer a free and impartial service to help consumers resolve disputes with financial institutions.
By being aware of your rights and staying proactive, you can reduce the risk of unnecessary charges and protect your financial wellbeing. For further details on your legal protections, refer to the Consumer Credit Act 1974.
