We recently highlighted the crazy fees still being charged for unauthorised overdrafts by the high street banks, despite pressure from government and the OFT.

A recent article by ThisIsMoney has now exposed the latest ploy by Halifax Bank of Scotland to extract more cash from customers with approved overdrafts. The popular financial site explains:  

The new charges are £1 a day for each day in an arranged overdraft up to £2,500, £2 a day for arranged amounts over this and £5 a day for unarranged overdrafts.

Although those with large overdraft balances may benefit, this will seriously penalise customers with relatively small overdrafts who stay within their limit.

The fixed fees will replace interest charged and HBoS argues that it simplifies the cost of going overdrawn. While it may be simple, the move draws attention to the high cost of regularly using an overdraft with the banking giant, never mind if you stray over your limit! The flat daily fee for unauthorised borrowing is an eye-watering £5 per day.

One angry HBoS customer is quoted as saying:

‘This is treating all customers as stupid. The only reason they are changing [their charges] is to increase their fees and to reduce the amount of overdrafts. I currently pay a minimal amount per month as there is a largish credit balance on my account for two weeks and then a small overdraft for two weeks. How can this be justified and why do they not tell the truth?’

A flexible Wonga loan is an alternative worth considering if you need some extra money for a short period of time. You can decide exactly how much cash you want to borrow and for how many days, which also dictates the cost. Unlike a bank overdraft, which is open-ended and requires discipline to manage sensibly, a Wonga cash advance must be settled within a month, on a date of your choosing. This allows you to deal with an urgent and short-term cash flow problem, settle the debt quickly and then get on with life.

Payday loans have started to take off in the UK over the past year and the term payday loan, or payday advance is becoming a more familiar phrase, especially when searching for fast cash online.

A payday loan is a relatively small loan, usually of a few hundred pounds, which is taken until your next payday. You normally have to repay it with your next pay cheque, or over several paydays, regardless of when you apply. And you will normally be charged a pretty hefty fee per £100 borrowed - typically between £20 and £30.

It’s basically emergency cash and payday loans have their place. They are often cheaper than bank fees for unauthorised borrowing, for example, but Wonga provides a great alternative for urgent funds without a long-term commitment.

Compare the cost of a payday loan with a cash advance from Wonga.com

Wonga also provides short-term cash advances online, but in a much more flexible and speedy way. For starters, the entire process is online - no faxing, postage or call centres - and you can apply any time of day or night, 365 days a year. You will receive an instant answer on your screen and we even guarantee to send cash to approved applicants’ bank accounts within 60 minutes.

Our service is also much more flexible than a payday loan. Wonga allows you to choose exactly how much cash you want to borrow and the cost of our online loans is calculated for you, based on how many days you need it for. The shorter the loan, the lower the cost - it’s that simple.

Flexible cash advances from Wonga

You can see how our flexible pricing compares with a typical fixed fee for a payday loan over 30 days. In most cases a Wonga loan works out better value and you can even repay us early with no catches or fees to worry about.

Typical 2689% APR

(Find out why the APR is so big!)

As usual, it’s taken pressure from a regulator to make high street banks change their ways! As reported by the Times, the OFT has been calling for more transparency about charges, particularly for going over your bank overdraft limit. With a multitude of potential fees and some fixed charges running up to £20 per DAY, it’s about time they made it easier for people to work out the true cost of accessing emergency cash. Here’s an extract from the article…

Britain’s banks have today bowed to pressure from the Office of Fair Trading (OFT) and agreed to make their current account charges more transparent. They have also promised to make it easier for customers to switch from one bank to another.

Their decision follows publication of the OFT’s latest study into the £8 billion market, which highlighted three problem areas: lack of clarity over charges, difficulty in switching banks and concern over the way banks charged for unauthorised overdrafts. The OFT said the existing system did not work well for consumers.

To improve clarity over their charges banks have undertaken to provide an annual summary of the cost of their account for each customer. This is designed to help customers work out if they are getting value for money. Banks have also agreed to make charges prominent on monthly statements, provide average credit and debit balances, which will help consumers to assess the possible benefits of switching banks, and provide a range of illustrative overdraft charges for different scenarios.

Perhaps they should take a leaf out of Wonga’s book - we calculate the total cost to repay every time you apply for a loan online and there are no hidden catches to worry about. Indeed, our flexible loans are not only a simpler and crystal clear source of emergency cash, but often a lot cheaper too.

Congratulations to Wonga fans Jeanette, Claire and Margaret, who were the lucky winners of our recent Facebook promotion. We invited customers who love our 24/7 instant cash loan service to become a fan on Wonga’s Facebook page - and win some mutual admiration.

These lucky ladies will be receiving a monthly delivery of flowers, wine and chocolates for the rest of the year, but we would also like to thank all of our new fans who joined us and left some lovely comments. And although this particular bit of fun has drawn to a close, we still welcome new fans ANY time and may even run further promotions like this in the future.

Watch this space.