Current account savers charged £10bn last year
Analysis of over 11,000 UK personal current accounts revealed that the average holder was charged £152 in bank fees in 2017, including overdrafts, foreign exchange and transaction fees, as well as monthly account charges.
The research, conducted by financial chatbot Plum, suggests that if these charges were applied to each of the 65 million active current account holders in the UK, banks brought in £9.9bn.
However, this £152 rises significantly for those who have an overdraft. Plum said the charges were closer to £221 per current account holder with at least one overdraft transaction per year.
Taking a closer look at the charges, Plum said 56% were due to overdrafts, both arranged and unarranged. Foreign exchange fees accounted for 11% of the sum while late transaction fees made up 6%.
Other charges (27%) included monthly account fees, unspecified bank fees or bank subscriptions. Plum found that bounced-back transaction fees can be quite high, averaging £5-£10, and can accumulate quickly.
Plum launched in January 2017 and describes itself as a ‘personal money assistant’ connecting to users’ current accounts to analyse spending patterns before setting aside money to be saved. It has 100,000 users and claims to have saved them £24m.
It has now launched its free ‘Fee Fighters’ function allowing users to check exactly what fees they are being charged by banks as Open Banking makes this possible.
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.
“We want to help people stand-up to their banks and demand a competitive deal. The more people who switch, the more that banks will be forced to compete for their business and fight to retain loyal customers.”