Talking to our customers we are used to great feedback and to hearing about their ‘Wonga moments’ – those particular times when their lives are made so much easier by taking a flexible loan to pay for an unexpected  expense or a great deal that might be otherwise gone by the time of their next pay cheque.
We heard one such story this week and it seems worth sharing it; a customer, let’s call her Miss K, found herself in a bit of a pickle when, after collecting money off her flatmates to pay their council tax, realised that the credit card she had with her didn’t have any funds.  She needed to deposit the money to pay the council tax the same day in order to avoid extra charges from the tax man.

On her lunch break that day, Miss K made a dash for her local bank branch, only find out that they were undergoing refurbishment and the counter services were suspended.  Just when she was about to fall in despair because she didn’t have her online banking security pad to transfer funds from one account to the other, she thought ‘Wonga!  She applied for a short term loan and had the money she needed in her account within 15 minutes!  The next day she managed to deposit the cash in her account and repay her loan, avoiding extra charges and paying interest on lengthy loans that she didn’t need

News outlets have been reporting this week on new regulation to enforce fair treatment of customers and clarity on charges by banks. The Financial Services Authority (FSA) has taken over the Banking Code Standards Board (BCSB) as the regulatory body for Customer Services Standard and, unlike the BCSB, it will have the power to impose fines if there are breaches in their conduct.

What the new rules say:

- A bank cannot refuse a refund on a fraudulent transaction just because the genuine card and PIN was used
- Savings account providers must give customers two months’ notice before reducing interest rates
- Unexpected debits made from your credit or debit card, such as from a car-hire firm, must be refunded by your bank
- From January 2012, all electronic payments must be credited to an account by the following business day. Until then, this can take up to three days

The rules are still not sufficiently clear for consumers to understand what their rights are, however, and without simple guidelines from where to draw information, they leave too much room for interpretation.
More importantly, these FSA rules cover savings and instant access accounts but don’t apply to unsecured loans, bank overdrafts or credit cards – the areas where the most unspecified and unclear charges often occur. 

Wonga is committed to transparency, and with our easy loan calculator you are always aware from the beginning of exactly how much you will pay back.

No wonder that Wonga customers love our service and send us amazing feedback – they can be in charge of their finances, avoid the pesky hidden charges and take a flexible loan that matches their requirements, not those of bank managers.

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.

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.

The Sunday Times exposed the crazy overdraft charges still being extracted by UK banks this weekend. In a stinging article, the Thunderer showed just how disproportionate some banks’ fees are, with RBS singled out as having the harshest penalties for careless or desperate customers.

In one RBS case study, the charges for going only £30 over your overdraft limit for just three days add up to an eye watering £118! The Which? report referenced by the Times also showed:

Alliance & Leicester in second place in its overdraft charges league, with a total penalty of £90. Lloyds, part of the taxpayer-funded Lloyds Banking Group, will fine customers £42, while Barclays charges £22.

Compare this to a similar cash advance from Wonga… A short term loan of £30 taken over three days would be a much more palatable £6.40 in fees and interest. 

What’s more, you’ll know the full cost up front and won’t have to dig around in small print to work it out for yourself. Apply online and you’ll receive an instant decision, with the money transferred to approved applicants in under an hour.

So next time you’re close to your overdraft limit and considering breaking the rules, don’t pay through the nose for a small amount of cash - it’s just not worth it. Consider a short term cash advance from Wonga and save yourself the worry and the money.

Avoiding bank jargon can naturally be tricky if you’re trying to get a loan from a bank, but there is a straight-talking alternative in the shape of an online cash advance from Wonga. In fact our website recently won an Interactive Media Award for its simple and customer-friendly design.

The entire Wonga service is jargon-free and we even provide a jargon buster for any bank type jargon you might encounter elsewhere. If you don’t rate industry awards, just take a look around Wonga.com for yourself or check out what existing Wonga customers have to say about the service.

Most of our customers say they love the simplicity of the service (amongst other things!), so if you want to avoid bank jargon you know where to look for a totally transparent solution to any short term cash flow problems in the future.

Concern from Which? over a new breed of UK bank account and the associated bank charges was recently discussed by the Beeb. It’s another example of the high street banks finding new ways to extract cash from customers after coming under massive pressure about unauthorised overdraft fees.

Naturally the likes of HBoS have denied any link and defend their new rates, which include a fixed £5 daily fee for an unauthorised bank overdraft. If you’re only stuck £50 or £100 into the red for a week or two the cost will really add up!

The simple fact is that banks make little or no money from people using traditional current accounts in a sensible way, so they rely heavily on hitting a minority with big overdraft charges, plus other fees, to make money. So now existing overdraft charges could be on their way out, is it really just a competitive market that’s prompting a new style of current account to emerge?

Which? certainly don’t think so.

Phil Jones, head of money research at consumer group Which?, said a new trend was developing while the OFT inquiry into the legality of bank charges rumbled on.

"Well it seems like a bit of a coincidence that while this court case is going on - and it looks like the banks are going to lose and have to repay consumers what they’ve unfairly charged them - that they are actually introducing a whole range of accounts with different charging structures."

In another classic example of the big banks being about as transparent as a swimming pool full of mud, Barclaycard has today announced a ‘major’ interest rate cut for its credit card customers… Only snag is that the interest cut applies to just a quarter of Barclaycard customers.

It’s certainly welcome news for those Barclaycard customers who are considered safe bets, but three-quarters of customers - some nine million - aren’t getting a bean. That’s because ‘their risk of defaulting had increased’ according to Barclays’ bosses. It smacks of Barclaycard wanting to look good but only delivering meaningful improvements to a minority. Those people still reap the rewards of recession-induced government pressure, but most people get the same, or even a worse deal.

Check out how the credit card providers have been steadily increasing their rates…

At Wonga we believe in transparency. We’ve never changed our interest rate and the same rate applies to everyone who wants to apply. We may be more expensive than a sensibly used credit card, but we’re all about offering you a short term loan, rather than trying to keep you in debt for as long as possible.

And many cheap credit card deals aren’t as cheap as they might appear once you check the small print or don’t keep up with repayments. Think short term. Think Wonga!

An article in the Times this week about personal loans highlights how banks and other lenders seem to be fighting to offer the worst loan deals at the moment - in a potential bid to curb demand. Despite gargantuan cuts in the base rate recently, a cheap loan is becoming harder to find than a new Christmas number one for Cliff. Here’s an extract:

The cheapest loan available is now 8.2 per cent – that is more than four times the base rate at 2 per cent. Experts say that providers may actually be trying to price themselves out of the market as the availability of credit continues to be squeezed.

Several providers have increased personal loan rates in the past four weeks – including Barclaycard by 2 per cent, Sainsbury’s Finance by 1 per cent, and Britannia building society and Lombard Direct by 0.5 per cent.

At the same time cheap bank loans are vanishing, the number of lenders who are willing to help out is also shrinking:

Lending on personal loans dropped by 26 per cent in October in comparison to the same month last year, according to uSwitch.com. Whilst six months ago borrowers could get rates of 7 per cent or less, all of these deals have now disappeared. Moneyback Bank, which consistently offered loans as low as 5.5 per cent over the past two years, has closed for new business completely.

Last year almost 1.3 million people took out an unsecured personal loan to consolidate debts – but with interest rates rising and credit being harder to obtain, less borrowers will have that option.

If you’re having trouble finding a cheap loan, or any loan at all, now might be the perfect time to try a short-term Wonga cash advance. You will need to pass our online credit check but, unlike the banks, we lend cash to tide you over for up to 30 days, so we’re not looking to predict your reliability over several years. You also won’t be left making repayments for years either of course!

We regularly hear from Wonga customers with stories about unexpected bank and credit card penalty fees. It’s an issue that’s been widely covered in the media and there are loads of websites now set-up to help consumers reclaim questionable charges from the likes of Barclays.

So this won’t be the first blog to offer views on much maligned overdraft fees, but we’ve recently heard from several people who’ve had a lot to say about Barclays Personal Reserve. So we checked it out for ourselves and had to laugh at this thinly veiled attempt to replace unauthorised overdraft fees with… Personal Reserve fees! 

So what is a Personal Reserve? Well you’re welcome to check out the Barclays site for yourself, but we’d suggest it’s a new name for describing a double overdraft. You see Barclays kindly gave their customers a Personal Reserve earlier this year (you have to opt out, much like Gordon Brown’s recent donor card proposals). It’s essentially an additional “buffer” overdraft that sits on top of your existing overdraft facility. It’s also a potential cash cow for Barclays - you’re not supposed to use it regularly of course, but we rather suspect they’d like it if you did. 

True, the previous unauthorised overdraft fee of £35 was done away with, but a Personal Reserve fee of £22 is payable every five working days you’re using it, even if you’re just a few quid overspent! Compare that to taking a short-term Wonga loan for five days, which will cost you £10.70 - less than half the cost. And we don’t ‘assume’ you’ll want one either. Worse still, imagine going £100 into your Personal Reserve for five consecutive 5-day periods (the maximum allowed) - you’d be charged £110 for the pleasure!

There’s a distinct possibility that banks will be forced to scrap their huge fees for unauthorised overdrafts, so this was most likely a pre-emptive move by Barclays. That might sound like good news for consumers, but the reality is that banks are unstoppable money making machines and, as tough as recent times have been for them, they will always find new ways to generate revenue.

There’s nothing surprising or wrong about that of course - they are businesses after all - but when it becomes harder to generate cash from consumers, transparency is often the first casualty. And there wasn’t too much of that about in the first place! If overdraft fees do bite the dust at any point soon, you can bet that new, potentially even more stealthy ways will be found to make up for the lost income.  

So full marks to Barclays for creativity and proactivity, but bear in mind that at the same time they decided all their customers deserved a Personal Reserve, they scrapped interest paid on positive balances in personal accounts and raised the interest charged on standard overdrafts. It seems a case of ‘giving’ with one hand while taking with the other.