What The Rubik’s Cube Has In Common With Bank Overdrafts

What The Rubik’s Cube Has In Common With Bank Overdrafts

- in Blogs, News

Gabriel+Pereira+Campanha,+champiFor the last couple of weeks, I have been getting some unusual press releases for a financial journalist – did you know that it was the Rubik’s Cube World Championship in Sao Paulo, Brazil, from July 17-19? No neither did I. Well, I say that, at least I didn’t until I got the first release about it a week or two ago, and I have been getting updates ever since. Fascinating stuff frankly, if you like that kind of thing.

For example, Gabriel Pereira Campanha of Brazil – with home support it has to be said – managed to complete the puzzle in a time of 32.51 seconds to win one of the 18 categories open to competitors at the champs. Given that the fastest time to complete it was 7.54 seconds by Australian Feliks Zemdegs, you may feel that it is less impressive. But Gabriel was only using his feet. His feet – yes, his feet. If you find this hard to imagine, then just check out the video which shows this amazing feat – or perhaps that should read ‘feet’.

If I am honest about it, I used to be able to finish about two sides of the Rubik’s cube max, and the only way I could ever ‘complete’ it was to break the thing apart and put it back together. I think it is fair to say I was always more practical than mathematical, even though my father is a nuclear physicist (no, he is, really!). Sadly though, for me anyway, I don’t think destroying the cube to put it back together was one of the categories…

Still, it just goes to show that providing you are doing the right thing, in the right way, you will get plaudits for it. At least, you should, right? Well, that brings me onto something that really got my goat when I saw it today – it seems that the banks (again!) are not playing fair with customers who do the right thing by them when it comes to overdrafts. Am I surprised? Sadly, no, it just seems to be par for the course.

You would think, quite logically, that if you had spent the time and effort to arrange an overdraft with the bank that if for some reason you ‘dipped’ into it because of a forgotten direct debit, or simply a mistake that sent you into the red briefly, you would pay a lesser penalty for that than someone who had failed to arrange anything with the bank, and just went into the red without any whys or wherefores. But, you would be wrong.

You see the banks are actually raising the penalties for people using authorised overdrafts while at the same time reducing fees for those who have unauthorised overdrafts according to research from statisticians Moneyfacts, and things are getting progressively worse. For example, back in 2008, just 22% of non-fee charging accounts levied a usage fee for an arranged overdraft. Now the figure has nearly tripled to 63%. The culprits are once again some of Britain’s biggest banking names, as you can see from the table.

Standard bank accounts – cost for an authorised overdraft of £300 for 15 consecutive days
Provider Account name EAR (%) Total usage fees (£) 2008 – Monthly cost (£) 2008 – Yearly cost (£) 2015 – Monthly cost (£) 2015 – Yearly cost (£)
Lloyds Bank Classic 19.94 6.00 2.38 28.56 8.25 99.00
NatWest Select Account 19.89 6.00 2.37 28.44 8.45 101.43
Barclays Bank Account 0.00 11.25 2.21 26.52 11.25 135.00
Halifax Current Account 0.00 15.00 2.40 28.80 15.00 180.00
Santander* 123 Current Account 0.00 15.00 1.59 19.08 15.00 180.00
Average cost of the above high street bank accounts 2.19 26.28 11.59 139.08

Source: Moneyfacts

The charges have reached an all-time high, “with the average cost of a high-street bank overdraft now six times higher per month than it was seven years ago, rising from £2 monthly in 2008 to £12 today”, said Rachel Springall, finance expert at Moneyfacts. At the same time, unauthorised overdraft charges have shrunk, either because the banks have put caps in place limiting the overall charges or because individual charges have fallen, added Ms Springall.

It really makes you wonder, doesn’t it? By doing the right thing, you get penalised, but by failing to do the right thing and taking advantage of a situation, you are better off. It would be no different to me breaking my Rubik’s Cube apart at the world champs and reassembling it in a bid to get a prize. Effective, but wrong. So I would say you should ‘make like Gabriel’, let your feet do the talking – and leave your bank to find a fairer and cheaper one if you need an overdraft facility. Pronto.