Watch bank balance to avoid exceeding account limits

media release – 1 November 2013

Watch bank balance to avoid exceeding account limits

A Quick Guide explaining how overdrafts work has been released today by the Banking Ombudsman Scheme to help people better understand why accounts go into overdraft or exceed account limits, and what to do to avoid associated fees and costs.

“First and foremost, people need to watch their bank balances and know what funds are available at any given time.  But people don’t always know why their accounts go into overdraft, and it can happen for lots of reasons,” said Banking Ombudsman Deborah Battell.

Aside from not having enough money in accounts, less well-known reasons for going into overdraft are because:
•          even if there is a zero balance, banks may honour payments, including automatic payments and direct debits, at their discretion 
•          customers don’t get immediate access to some deposits awaiting clearance.
“This Quick Guide is timely because the build-up to Christmas is on, as is the pressure on wallets.  We deal with many cases of people who go into overdraft because they don’t keep a close enough eye on their available bank balance and aren’t aware of their bank’s terms and conditions around overdrafts.

“The majority of these people are irritated at having to pay the costs of going into overdraft, and possibly also at themselves.  For them, it is an annoying way to learn.

“However, there is a small percentage of people for whom dipping into overdraft is the start of a descent into much deeper financial woe.

“We appreciate for those on a tight budget, meeting normal expenses plus the additional seasonal demands of Christmas, is a very big ask.  If anything, it’s even more important these people keep an eagle eye on their bank balances,” said Ms Battell.

The Overdraft Quick Guide is the latest in a series of Quick Guides on the Banking Ombudsman Scheme website, including one on Cheque clearance.

Budgeting advice is available online at https://www.sorted.org.nz/calculators/event-money-planner.  The New Zealand Family Budgeting Service website also has advice and information, or you can call freephone 0508 283 438 to speak to one of its budget advisers.

Overdrafts.pdf

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