Banks can apply two main charges if you spend more than you have in your account:
- daily interest for using an overdraft – this can be arranged, where the bank has agreed an amount you can spend in advance, or unarranged, where they allow the payment to go through anyway
- a fee to stop a payment – this is usually called an unpaid transaction fee.
There’s usually a monthly cap on the amount a bank will charge you in unpaid transaction fees and unarranged overdraft interest. This can be found in your account terms and conditions – ask your bank if you’re not sure.
If you think the charge is wrong or unfair, contact your bank to ask them to review it. They might even waive it as a goodwill gesture.
If the charges are making your financial situation worse – for example, you’re struggling to buy necessities, pay bills or you’ve lost your job – the bank should suggest ways they can help, such as refunding the charges or agreeing an interest-free repayment plan to clear your overdraft.
For more information and template letters to use, see MoneySavingExpert’s reclaiming guideOpens in a new window