We’d be willing to bet that you don’t know what your bank overdraft charges are. We’d also be willing to bet that pretty much all the people you can think of also don’t know what their overdraft charges are. And we’d also be willing to bet that banks are very happy about all of this, given that they generate a third of their revenues from overdraft (!).
We surveyed thousands of people and the obvious conclusion is that very few have a clue. Every bank has a different overdraft policy and they explain their terms in confusing ways making it very difficult to understand and compare the cost across different banks.
At the same time, people are well aware of almost all other important expenses in life – how much it costs to get to work, the price of their lunch, or how much they spent on holidays this summer.
Unarranged bank overdrafts can be way more costly than payday loans. Arranged overdrafts may not always be available and can also be expensive depending on how much is borrowed. At Creditspring, we think there needs to be a lot more clarity and transparency around these charges. Overdrafts could serve a purpose, but making it so confusing seems unnecessary to us. We wonder if the banks that make things confusing have a hidden agenda?
Before establishing Creditspring, we spent years in finance, pricing all kinds of complicated risk instruments, yet the terms were so much easier to understand than those used by banks to explain their overdraft charges to their customers. In our opinion, there is really no excuse for overdraft charges being so confusing.