Account Charges
The charges payable for different bank accounts can vary greatly. Typically, the fees you are charged will be for:
opening and closing the account
sending you a regular account statement
administrative maintenance of the account
specific transactions, such as withdrawals or money transfers
use of an overdraft facility
issue and use of your electronic account card
stamped, authorised copy of your bank statement, for example, for use as a financial reference.
Banks will usually distinguish between fixed and variable costs. A fixed cost is a set charge, for example for maintaining the account, whilst a variable cost might be charged for a particular account transaction. The exact amounts that you are charged will vary between accounts and banks.
The use of an overdraft, an extension of funds available in your account, is usually subject to high charges. This is because the overdraft acts as a form of loan from the bank which enables you to withdraw more money than is currently available in your account. The bank charges you as payment for the loan service provided.
Although you may incur certain charges for the use of your current account, you will also be paid interest by the bank. Interest is money that the bank pays to you: it is a percentage of the amount that you deposit in your account. The interest rate applied to each current account is determined by the bank according to the amount of money deposited and the regularity of these deposits. The interest rate will be higher if there is a lot of money in the account and the deposits are regular, because this gives the bank more financial security.
Remember that you may be quoted an interest rate which does not include tax; capital gains tax is obligatory and charged at twenty-seven percent. This means that any interest you earn will be subject to twenty-seven percent tax: if you are offered a particular rate, check whether this rate is gross or net. Interest rates on current accounts are usually low, often around two percent.
