Friday, 27 November 2009

Overdraft Charges: Caveat Emptor

The UK Supreme Court decided on Wednesday 25 November that the Office of Fair Trading could not challenge bank overdraft charges as an unfair contract term. You can read the decision here.

In effect the court said, not that the charges were fair or unfair, but that they didn't have to be fair. English contract law has long held to the principle of 'caveat emptor' and will not intervene because a buyer has paid too much for something or a seller has sold too cheaply. So, if bank customers don't want to pay exorbitant bank charges they must not 'buy' an overdraft from an expensive bank.

We all need bank accounts these days so we can't avoid overdraft charges just by keeping our money under the mattress. The only way, then, is to make sure we don't go overdrawn. Keeping track of your funds, especially if you're running a business, is infinitely easier if you have learned bookkeeping which is exactly why the Accounting and Bookkeeping College is here.

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