Lessons learned: Why students should read the small print on bank accounts

Little or never-used bank accounts are occupying the minds of readers this week. First up is Fergus who emailed in connection with a letter Bank of Ireland sent to his 25-year-old son, Mark. When he was a student, Mark was persuaded to open an account with the bank with an introductory offer of a small sum of money “and some sort of phone charger that he was delighted to take”.

This all happened years ago and Mark never actually used the account and no correspondence was ever received at his address right up to the start of April this year. The charger probably doesn’t work now either. Early last month a letter came. It confirmed that there had been no transactions on the account but Mark had been overdrawn for the previous six months.

“My son spoke with Bank of Ireland and they advised him that he could close the account but as it was overdrawn he would not be able to open another BoI account without clearing that debt. He paid the €7.06 on the account and closed it. My issue is that BoI approached thousands of students and offered similar rewards to open an account. I would have felt that between 2016 and 2021 they should have advised Mark that his account was dormant and would begin to incur charges.”

Fergus says that “having to pay the bank charges on an account that he simply never used and had completely forgotten about is a bit annoying. I wonder how many young people have found themselves in this position?”.

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He says that what is even more annoying “is the fact that I had to persuade him to pay the arrears in order to ensure that he had no credit blacklisting on his name. I again wonder how many young people find themselves in this position and are unaware of same or simply didn’t deal with the matter”.

He wonders how much the bank has collected through overdrawn student accounts “that simply were pushed on these people with the promise of a simple phone charger. Not great practise in my view from BoI”.

We contacted Bank of Ireland and were told that “in line with the Student Account Terms & Conditions these customers move to a Graduate Account after a stated period of time, and they subsequently move to a Personal Current Account. At each stage customer correspondence is issued in advance to notify them of these impending changes, and on each occasion customers have the option to close their account if they wish. We would be happy to engage directly with this customer to clarify what correspondence issued to them and when. The fee charged is the Personal Current Account maintenance fee, a single monthly €6 flat fee.”

Forgot to close account

Days later we got a mail from a different reader about a different bank. Comhal held a student account with Permanent TSB and finished his studies in June 2020. He says he then moved to Austria and opened a bank account there. “With the pressures of moving countries during the pandemic, my Irish student bank account was one of the last things on my mind. I transferred the money out of the account but forgot to close it,” he says.

He mentions that the account also had no debit card linked to it. “In November 2020, Permanent TSB converted the account into an Explore Account and began charging maintenance fees on the account. As the account was empty, this meant that the balance went into minus. I received no notification from TSB about the account being converted,” he says.

It was not until March of this year that the bank wrote to his home address in Ireland “to inform me of an unauthorised overdraft on my account totalling €24.78. As this was unauthorised, they informed me that interest was being charged at 12 per cent and that they had reported me to the Central Credit Register. This was the first letter I received from Permanent TSB despite debt accruing on the account since November 2020. The letter did not address the fact that the account was converted.”

He says when he contacted customer care he was told he had to pay the amount due. “Unsatisfied with the conversation, I requested a call-back from my branch. The staff member who called me from the branch was very pleasant and said he would see if the fees could be waived. The following day, I was informed by email that the fees would not be waived and I would have to pay them to close the account. I have since done this.

“However, I believe that this was a very poor way to treat a long-term customer (I had been a customer since 2008) and it will certainly discourage me from banking with them in the future. Although the fees only amounted to slightly below €25, it is more the fact that my debt was reported to the Central Credit Register that annoys me. I understand that I made a mistake but I really think Permanent TSB could have made more effort to resolve this earlier. Is there anything that I can do pursue this further with the bank and the credit register?”

PTSB told us they do not “report amounts that low to the CCR”. Its customer care team is making contact with our reader “to clear up any misunderstanding”.