Bank overdraft fees court decision

Bank overdraft charges have long been an issue of annoyance for bank customers especially when the size of the fees appear to be excessive however the banks have today lost a key test case on overdraft charges.

A High Court Judge ruled that the Office of Fair Trading (OFT) can use consumer contract regulations to decide if bank overdraft charges are unfair. The OFT will then be able to look at bank charges and compare these to the actual costs incurred by the bank overdraft.

According to the OFT bank overdraft charges should only allow the banks to recover certain administrative costs which would include postage, stationery, staff wages as well as a proportionate share of the costs of maintaining premises and IT systems necessary to deal with overdraft charges.

It is now expected that there will be several more High Court cases to decide what an appropriate level of a bank overdraft charge should be and once this has been completed it will be possible for those who have been over unfairly overcharged to reclaim money. These refunds could run into hundred of millions of pounds and will hit banks who are already suffering from the credit crunch. On the other hand it will bring joy to those bank customers who have been unfairly penalised by their banks over the years.

Shopping around online

I thought it might be useful to give an example of how much money can be saved by being a savvy shopper when buying an Apple iPod nano MP3 player in silver.

My starting place for buying the iPod player is Apples online shop where the price including VAT is £129 and this also includes free shipping but surely I can buy it cheaper elsewhere?

The easiest way of shopping around is to use price comparison websites which compare the prices available from a variety of online shops. It is important to note that comparison sites do not list all online shops but they do give a good indication of the best price.

One of the most popular price comparison sites is Kelkoo so a quick visit to their site and once I have entered the details in their search box I can quickly see that best price for a new iPod is £108 including free postage and packaging from Best Priced Brands and the next cheapest was £117 from 1staudiovisual, whilst the most expensive was £138.48 from Audio Mania. Buying from Best Priced Brands would save me £21 compared to Apple which is a whopping 16% saving.
A quick look at some of the cashback websites such as Topcashback and Cashbackkings showed that neither Best Priced Brands nor 1staudiovisual offered any cashback deals. Apple was shown as giving 3% cashback if I bought through Cashbackkings which would save me £3.97 if I wanted to buy direct from Apple.

It is therefore possible to save quite a bit of cash by using price comparison sites to shop around for the best deal and the £21 saved can go against the cost of downloading some itunes to play on the iPod.

Best Savings

If you have any savings in the bank or building society generally the best type of savings account is an ISA as it is tax free and normally has quite a competitive interest rate. But what if you have already invested your £3,600 ISA allowance for this tax year - well there are a number of easy access savings accounts paying decent rates of interest thanks to the credit crunch which has made it more important for banks to bring in more savings.

Kaupthing Edge, an online branch of Iceland's largest bank is currently paying 6.5% on £1,000 invested in its Instant Access Account. Whilst this rate gives the best ISA accounts a run for their money it is bearing in mind that once tax is deducted the rate falls to 5.2% which is still a very good rate.

If you have less than £1,000 to save then ICICI Bank UK, a subsidiary of the Indian bank ICICI offers an interest rate of 6.16% and this is guaranteed to match the base rate plus 0.3% until December 2011.

Bank details available online

According to the latest Symantic Security Threat Report criminals are targeting social networking sites as their users are less careful with their personal details making them perfect prey for fraudsters to steal their identities.

In fact according to the report details of some UK bank accounts are available for sale online for as low as a fiver in certain 'cyber crime supermarkets'. Credit card details were also available for as low as 20p per credit card number, whilst full identies were also available. Symantec believe that online identity trading was on the increase and even stolen ebay account information was found to be for sale.

First Direct pull mortgages

First Direct today announced that it was to withdraw its mortgages for new customers after receiving five times as many applications as it normally received. The news is seen as further evidence that the credit crunch is starting to take affect.

Shortly after First Directs announcement the Co-operative Bank pulled its 2 year rate mortgage deals while the Royal Bank of Scotland, Natwest and Kent Reliant Building Society raised their variable rates for existing mortage holders.

The above situation has arisen as banks and building societies are finding it much harder to raise money from credit markets for mortgages.