Unauthorised Bank Charges
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Payday Loans APR
Whose charges are over 46 million % APR the answer may surprise you! Or will it. 46,450,869% APR? Spending too much Christmas money has never been so costly.
Shoppers who risk spending more Christmas money than they have available could be hit with astronomical bank charges.
Six in ten transactions still involve cash, but those tempted to pay by debit card for Christmas presents or the Christmas dinner could find the actual cost to be shocking if they go overdrawn.
“People are aware that going into an unauthorised overdraft with their bank will bring about bank charges,” confirmed Andrew James, spokesperson for Bad Credit Loans 4 You, a UK finance specialist at sourcing Xmas loans and money for Christmas /no-money-for-christmas.html
“What a lot of people don’t fully realise is the total of these bank charges and how it could push them into bad credit problems.”
Interest and charges attached to unauthorised overdrafts can be equivalent to an APR of more than 46million% according to a Money Mail investigation.
These exorbitant fees are forcing many UK families to obtain bad credit loans to cover the long term costs, or payday loans to cover the additional charges until their next pay cheque.
Millions of people exceed their overdraft limit or borrow money for Christmas on a credit card during the run up to Christmas.
The Money Mail investigation tested the cost of borrowing £200 from payday loan companies against the cost of a one-off payment which would send someone into an unauthorised overdraft for ten days.
“Payday loans are becoming more popular but often get severely criticised in the press”, stated Mr James of Bad Credit Loans 4 You.
“But they have only arisen because of a gap in the market caused by the banks disinterest in those often with bad credit history who struggle to make ends meet and live from one pay packet to the other.”
Borrowers pay a one-off fee, often around £25 for every £100 which is borrowed from a payday loan company, agreeing to repay the loan when they are paid.
Payday loans are often paid into the borrowers account within minutes of the application being accepted.
The investigation by Money Mail discovered that unwitting customers of Lloyds TSB, of which 41% is taxpayer owned, would face unreasonable charges of £85.95 over a ten day period for a £200 unauthorised overdraft.
This consists of eight daily charges of £10, a £5 ‘usage fee’ and an additional 95p interest all of which could serious add to someone’s bad credit problems.
The fees are equivalent to an APR of 46,450,869%, almost 15,000 times higher than the APR of Wonga, one of the UK’s leading payday loan companies.
Lloyds have condemned the comparison, as in practice, no-one would pay this annually because charges are capped at the £85 level every month.
Those consumers who bank with rival Santander would be charged £60.68, equivalent to an APR of 1,586,122%, a lot lower than Lloyds TSB, but still remarkably higher than any payday loan.
In sharp contrast, payday loan companies Payday Express, Payday Financial and Payday UK charge £50, an APR of 344,521%.
Wonga, the most high profile payday loan firm requires £25.77, an APR of 3099%.
The cheapest high street bank is Barclays which charge only £8 for a £200 unauthorised overdraft for ten days.
Andrew James of Bad Credit Loans 4 You stated; “Payday loan companies are forced to express their fees and charges as an APR by the Office of Fair Trading.”
“This clearly highlights how expensive it can be to borrow from them, but banks are under no such constraints and can hide their charges as cash sums, giving them a clear advantage.”
Although payday loan companies are now more in the public eye with TV adverts and Premier League football team sponsorship deals, they are not regulated by the Financial Services Authority, so borrowers have no protection from the Financial Services Authority.
Penalties for missed payments are unclear and charges can quickly escalate out of control, possibly creating the need for bad credit loans to cover costs.
If a debt is not repaid, the worst scenario could be that it is treated as a new loan, incurring the same fees which you originally paid over and over again.
Banks have argued that it is unfair to compare payday loans firms and unauthorised overdrafts, but Consumer Focus found 1.2 million people use payday loan firms each year over fears of bank charges.
Payday loans ensure that their bank balance in check, ensuring any bad credit history does not get worse.
“These products are controversial, but we don't want to see them banned. We need banks to provide alternative short-term credit for cash-strapped consumers”, said a spokesman for Consumer Focus.
In reply, a spokesman for Santander said; 'An overdraft can be an effective way of funding a short-term need for extra money, and is normally cheaper if you contact your bank and arrange an overdraft.'
Additonally, Mike Regnier, current accounts director for Lloyds TSB, says; “We offer our customers a number of services to help them manage their money effectively and prevent them from accruing fees and charges on their account, such as free text alerts that warn customers when they are about to go over their limit.”
“The majority of our customers do not use their overdraft facility.”
“Those who do, dip into it only marginally, so would be covered by the £10 buffer we provide and therefore wouldn't incur any fees.”
Leading professional association for insolvency, R3, estimated that almost a third (31%) of personal insolvencies which occurred in March 2010 were triggered by consumers overspending Christmas money during the festive season.
“With banks charging such high unauthorised overdraft fees, many people will now be looking for ways for saving money at Christmas, seeking a Xmas loan or Christmas loan to ensure they aren’t short of money for Christmas”, said Mr James of Bad Credit Loans 4 You.
Bad Credit Loans 4 You helps out people who fear they have been blacklisted because of CCJ’s, Late Credit Card Payments, Defaults, CIFAS, Bankruptcy etc.
Bad Credit Loans 4 You holds a Consumer Credit Licence issued by the Office of Fair Trading. The company is also covered by the Financial Ombudsman.
Bad Credit Loans 4 You is also registered with the Information Commissioner’s Office for Data Protection.
For help, phone 0800 011 4503 or visit
/christmas-loans-for-bad-credit.html
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Notes for Editor:
/money-for-christmas.html
Loans 4 You of London Ltd
Innovation Centre
Monks Brook
PO30 5WB
United Kingdom
Tel: 0800 011 4503
Bad Credit Loans 4 You was formed in April 2010, bringing together a team of specialists that together offers over 50 years of expertise to help applicants gain the unsecured loans they need.
From its UK head office in Monks Brook, Loans 4 You operates across Britain, sourcing loans for people with bad credit.
Bad Credit Loans 4 You holds a Consumer Credit Licence issued by the Office of Fair Trading. The company is also covered by the Financial Ombudsman.
Bad Credit Loans 4 You is also registered with the Information Commissioner’s Office for Data Protection.
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Loans 4 You helps people source the personal loan they need. We provide an opportunity for those with bad credit history, poor credit history & also good credit history obtain bad credit loans and poor credit loans.
As a specialist in the UK finance market for those with bad credit history, Loans 4 You routinely provide details of affordable loans for various reasons such as; bad credit computer loans, bad credit car loans, bad credit wedding loans, dental credit, furniture loans & Xmas loans.
Loans 4 You has a senior management team with over 50 years collective experience providing vital knowledge of the bad credit loans sector & helping those with CCJ’s, defaults, late credit card payments, mortgage arrears etc.
Our mission is to aid people who have been discriminated against because of their bad credit loans problems. We assess bad credit loans applications on your current budget and ability to repay bad credit loans, not just your bad credit history.
