Santander doubles overdraft fees

Bank to up daily arranged overdraft fee to £1 from March, although it hasn't told many of its customers yet.

Santander is doubling its daily charge for unauthorised overdrafts from 50p to £1, although it hasn’t exactly been forthcoming about the increase.

The new charges come into effect from 16 March 2012. Santander claims it wrote to customers in November advising them of the changes and says it has written to them again this week, although I'm a customer and I have to yet receive a letter.

The bank’s website has hidden the information away in the Legal Details section of its various accounts, although it does mention the current 50p charge on all of the accounts’ main pages.

A spokesperson for the bank told us: "We’ve posted the new charges info on our website in the Legal Details page, where we are required to post such information, and during the application process online, in branch or by phone, new customers are advised of the fees and charges before they sign up to any of our accounts. In branch they are physically given a copy of the attached document notifying them of the changes. This document is titled “Important information, changes to our arranged overdraft fees”."

The £1 charge is to be capped for 10 days in each monthly statement period for Preferred, Reward, Travel Reward, Family Reward, Premier 50, Premier 21 and Choice account holders.

It’s capped at 20 days in each monthly statement period for Everyday, Student, Santander University, Post Graduate, Graduate, Basic and International Student account holders.

However, the bank has introduced a fee-free buffer where any customer who goes overdrawn by £12 or less won't pay any fees. It has also introduced a ‘grace period’ each day so any customer who goes overdrawn has until 4pm to credit their account with cleared funds to reduce or avoid paying overdraft fees.

It also offers a text message and email alert service, which sends alerts if an account goes below a set amount.

Earlier this week, Which? criticised the complexity and cost of overdraft charges and called on the Government to give the financial regulator powers to clamp down on them.

Where to find a fee-free arranged overdraft

Funnily enough, Santander is currently offering a fee-free arranged overdraft for 12 months to people switching to its Preferred current account. If you’re switching from another bank, you’ll also get a £100 welcome bonus, 5% interest for a year on balances of up to £2,500 and you may even be able to transfer your existing overdraft. However, you need to pay in at least £1,000 a month and use the bank’s Switcher service to qualify.

Be aware that if you go into the red once your interest-free period’s over, you’ll be charged £1 a day for an arranged overdraft and £5 a day if you go over your arranged overdraft limit.

Santander’s Reward, Premium and Everyday accounts offer a fee-free arranged overdraft for four months. If you have one of those accounts and you dip into the red regularly, you might want to consider switching to the Preferred current account, although bear in mind you need to pay in at least £1,000 a month.

If you would like an overdraft buffer but don’t want to switch to Santander, the Co-op is currently offering fee-free overdrafts on its Current Account, Current Account Plus and smile accounts until 4 April.

If you need a longer overdraft period, you can get a fee-free £200 overdraft through the Co-op’s Current Account Plus. You need to pay in at least £800 a month to the account to qualify.

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