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.

A recent article in the Times exposed a flood of complaints from angry Barclaycard customers, who claim the monster bank may have been using dodgy tactics to extract fees from them.

They say they have been hit by late payment charges after their normal repayment date was shifted without warning…

Not since British Gas introduced its woefully inadequate boiler breakdown cover or TalkTalk underestimated demand for its “free” broadband have we received so many letters on a single subject. The sheer scale of the correspondence suggests an orchestrated attempt by Barclaycard to confuse borrowers into missing their payment dates so that it can levy extra interest and charges. Worse still, to judge by the letters we have received, the lender appears to be targeting borrowers who usually clear their balances in full each month.

Barclaycard’s inadequate explanation is that it gives all customers a minimum of 20 days to pay from the date that a bill is generated, but that this payment window can be as many as 32 days. It says that the date can change because of weekends, Bank Holidays and, crucially, “operational expediency” - a vague notion that can only mean “whenever we wish to boost profits”. This is simply not good enough.

It sounds like another example of the banks being about as clear as mud when it comes to the cost of their services. Wonga will never change your repayment date, but you are always welcome to bring it forward! We won’t charge you a fee if you decide you want to repay a cash advance early and save interest.

A recent survey by the Halifax has found students owe an average of nearly £220 on credit cards - adding to the potential long-term debt they’ll graduate with.

Here’s another statistic (for what statistics are worth!). The average student leaves uni owing some thirteen grand! Incurring this kind of major debt seems to have become an accepted part of education these days.

If you’re about to start a degree yourself, here are a few tips to bear in mind…

• Minimise student loans by only taking out what you need, not the maximum available
• Try taking out small Wonga loans for occasional emergency costs, but only when you know you can repay the cash comfortably within a month. That way you clear the debt within 30 days, not some years after you graduate
• Draw up a budget of your income and outgoings - and stick to it
• Shop around for banks offering student accounts with no charges
• Make the most of student discounts - many retailers offer them and you won’t get these kind of reductions again until you hit retirement age!

The Times has written about recent research from Moneyexpert that exposes another ruse by banks to secure even more revenue during the credit crunch and ongoing regulatory pressure.

The article highlights how the best savings rates are being reserved to tempt new customers, while existing customers are often seeing the interest they can earn reduced. Instant access accounts are being worst hit, as the banks look to tie customers in with products that come with a long-term commitment. Here’s an extract, but you can read the whole article here at the Times Online.

Banks and building societies have slashed interest rates for loyal customers with instant access accounts as they look to lure new savers with eye-catching offers on long-term fixed-rate products.

The credit crunch has created a “dash for deposits” with rates as high as 7.2 per cent paid on fixed-rate savings. However it is only long-term savers, happy to lock their money away for extended periods, who have been the beneficiaries, an analysis by Moneyexpert.com, the comparison site, has shown.

The average rate paid on instant access accounts has dropped from 3.76 per cent in January to just 3.3 per cent now, said Moneyexpert. Northern Rock’s Silver Savings account, for example, paid 5.75 per cent in January but has since been cut to 5.02 per cent.

Your credit history can be a big factor in the cost of borrowing. Like a school report, good behaviour is rewarded, but if you don’t play by the rules it’ll be noted by the credit bureaus and your grades will suffer!

Lenders may penalise you with higher interest rates, or refuse to lend you anything as a result of a poor credit rating, although it’s worth noting that many banks will be looking to assess your potential profitability as much as any risk of non-payment!

Your credit history looks at current debt, bill payment and a number of other factors. It may seem strange, but not using credit can be as bad for you as behaving badly with it. Lenders are looking to rate your reliability in the past, so if you’ve not yet proven you can be trusted you’ll be classed as higher risk.

Using Wonga.com can actually help improve your credit rating - and fast. This should never be the sole reason for applying for a cash advance of course, but it’s a very useful bonus and could mean better deals from potential long-term lenders in the future.

Wonga is good for your credit rating because we carry out a credit check as part of our sophisticated decision process. When you take a short term loan from Wonga we create a SHARE account, which is a way for lenders to see the past behaviour of potential customers with other companies. Thanks to our hi-tech systems we update this information very rapidy with good news, everytime you repay a cash advance on time.

It means other potential lenders, such as mortgage providers, banks and credit card companies, get almost instant visibility of your trustworthy use of our service. Anecdotal evidence from testers and customers suggests it’s a very quick way of improving your ‘FICO‘ score, which is a rather mysterious rating used by some credit bureaus and can play a deciding role in applications with some lenders.

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!

Lloyds TSB has this week been criticised for promoting Visa debit cards to kids, without always getting the green light from mum & dad. The bank’s excuse is they don’t always know where the parents are. But perhaps the suprising thing is that it’s standard industry practice to promote cards to kids as young as eleven.

Many people will be mortified at the prospect of a big bank getting its claws into their child before they turn sixteen, but it’s important to remember we’re talking about a debit card here - not a credit card. The bank argues it can be used to make savings online and to teach the basics of cash. It can’t be used to go overdrawn and suposedly can’t be used to make adult purchases.

One furious dad uncovered by the Guardian would beg to differ, claiming his young son got hold of Viagra and fake ID (amongst other things) with the his Lloyds TSB plastic. But that’s opening up a whole new can of worms, because you could argue the lad had obviously got funds in his account plus unrestricted internet access, so pinning his behaviour purely on the fact he had a debit card seems a little narrow minded. What’s not acceptable is the fact his dad wasn’t aware the bank had offered him the card in the first place.

There’s no question banks should always ensure the parents or guardians of any child are on board with the idea, but some of the outrage expressed this week seems to miss the point. Children need to learn about money and start being responsible for it if they’re to wise up before adulthood. If having a bank account is acceptable to many, why not the means to spend some cash in the way most people spend it? It might not be for everyone, but if the bank had got its act togehter on parental consent then it might not have created such a palarver. It seems like they didn’t, which isn’t on.

For the avoidance of doubt, Wonga is a credit-based service and will therefore definitely not be availble to under-18s!