The Big Banking Chat: lifting the lid on hidden fees and charges

Being charged for something you weren’t expecting to pay for sucks. But, that’s exactly what happens to so many of us when it comes to our finances and bank accounts.

The worst part about it isn’t just that we have to pay for a service we view as a core part of banking, but also the fact that we have to dig deep into our statements—and our bank’s websites—to understand what we’re being charged for in the first place.This lack of transparency is hugely frustrating. If we all properly understood what leads to fees and charges being levied, they’d be far easier to avoid. Or, at the very least, we’d be able to tolerate them as a necessary part of a financial exchange.

At N26, we’ve always believed that such transparency is the least we owe our customers. And today, we want to lift the lid on some of the most common causes of hidden fees and charges.

Firstly, why do they exist at all? The blunt truth is it’s all about the money—these fees are a great way for banks to make a profit without letting on just how much they’re charging you for ‘free services.’ And because most customers roll their eyes, and just let it slide, many traditional banks continue to do it. They’d argue that they’re only covering their costs, but the way these charges are often hidden suggests that something a little more underhand is going on.

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So, let’s take a look at some of the types of fees that we may unexpectedly get charged for when we’re using what feels like core parts of our bank’s services.

• Insufficient funds: most traditional banks will levy a small charge if you don’t have enough cash to cover a payment request, and some banks will do this even if the payment doesn’t go through.
• Stop payment fees: sometimes you’ll need to ask your bank to stop a payment being made, particularly if that involves a cheque. But what you don’t know is they’ll charge you for the service too—in France this can cost up to €16 if you visit a branch.
• Early closure fees: perhaps you need to close an account, or maybe you need your rainy day savings earlier than expected—many traditional banks will charge you for the privilege, particularly if it’s a savings account.

And we’ve only scratched the surface here. For a full list, check out our round-up of 13 different hidden fees and the explanation behind them here.

The other most common cause often comes from using your card in a foreign country. When you do this, most traditional banks don’t just apply the standard exchange rate for exchanging currencies. They add their own additional fee on top—whether you’re paying by card, or trying to withdraw cash.

If you’re paying by card, you’re rarely given any indication that the bank is adding its own fee. And while some cash points may make you aware of this, they then add another layer of confusion. You’ll be asked: do you want to pay in the local currency or your native currency? The correct answer is almost always use the local currency—this is because your own bank will then do the currency conversion, and you’re more likely to get a better rate. But, wouldn’t it be great if your bank told you this in the first place?

At N26, we put our money where our mouth is. We don’t take a large slice for our own benefit when you use your card abroad, and we don’t levy many of the most common hidden fees and charges. We believe your money should go where you intend it to go—and not be sliced and diced according to the whims of a third party. That’s why our app offers complete transparency over every penny you spend, meaning you always feel in control.

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Read up on our tips for understanding banking jargon. And if you think it’s time for a change and you want to take back control, get started here.