The new court ruling on banks and the whopping fees they charge for unauthorised overdrafts has been widely reported in the media this week. The final outcome is still not certain, but it has put the issue firmly back into the public eye.

One of the main arguments against the scale of the charges is that they can be imposed regardless of how far punters go over their limit. For example, you could be hit by a fee of more than £30 for going £50 into the red for just a day or two. It goes to show the true cost of accessing instant cash in an emergency.

Wonga is planning to provide a fairer alternative. You’ll still need to pay for the speed and convenience of an instant loan of course, but you’ll be able to choose exactly how much you want to borrow and for how many days - with the full cost calculated for you up front.

As The Times reports: "The banks have until May 22 to decide whether to appeal. As they struggle with their own financial problems — as evidenced by Royal Bank of Scotland’s announcement of a £12 billion rights issue to cover a potential £5.9 billion write-down on its assets — the banks are thought unlikely to accept a judgment that could lead to billions of pounds being reclaimed. If the OFT concludes that the charges are unfair it could cap fees at a much lower rate than the £30 typically charged, costing the banks an estimated £10 billion more."

This entry was posted on Friday, April 25th, 2008 at 9:46 am and is filed under Banks, Credit, Debt, General.