Wow. The Times has today broken a personal finance story that beggars belief. Actually, it will shock most people but the Wonga gang is only too aware of the crazy fees banks charge for unauthorised overdrafts. It’s one of the reasons we set up our service - to offer people an alternative for emergency funds. But even we were choking on our cornflakes while reading this sorry tale.

Lloyds TSB is alleged to have charged one unfortunate student a whopping £800 in cumalative fees, after she initailly went just 8p overdrawn. Yep, that’s eight pennies. No longer enough to buy a modest selection of sweets from the corner shop.

OK, so she didn’t act quickly to rectify the situation, but it’s a mighty big sledgehammer to crack a particularly tiny nut. The bank disputes its customer’s claims, but recent research found that Lloyds TSB had the most expensive overdraft charges of all the high street banks.

Whoever you believe, the fact remains that banks can charge customers extortinate fees if they dip into the red - either by accident or on purpose - regardless off the amount. It’s the lack of transparency and sense of fairplay that stinks. So next time you’re in need of a few pounds (or pence!) in a hurry, think very carefully before stretching your current account. Consider a short-term Wonga loan instead!

This entry was posted on Tuesday, July 22nd, 2008 at 3:29 pm and is filed under Banks, Credit, General.