Seeing red? Overdrafts explain

A POSITIVE working relationship with your local bank manager could save you a significant amount in fees and interest if your French current account balance falls below zero. Local branches

often have room for manoeuvre to set interest rates or waive penalties as a goodwill gesture, dealing with overdrafts on a case-bycase basis – which could be welcome news for those who are

more familiar with the centralised decision-making found in many UK high street banks. However, there are other notable differences in how overdrafts operate here – and making arrangements

before you go into the red is key. Authorised overdrafts (called a découvert autorisé or facilité de caisse) are a standard feature in many current accounts – check the terms, rates and fees

in your convention de compte, the contract that you signed when opening the account. Details should also be in the round-up of tariffs that banks are required to send to you each year.

Interest (called agios) can be up to 19.15% per year, the maximum allowed by the Banque de France (called the taux d’usure). This rate is applied daily and typically debited from the account

at the end of a month or quarter. Many of the terms, however, can be negotiated. How long you have been a customer, how many savings and related products you have with the bank and your

perceived risk will all be taken into account when asking for an overdraft to be set up, extended or revised. Loyal and trusted customers may benefit from an interest-free period or the

waiving of certain fees. An authorised overdraft is typically designed to be used for a maximum of 15 days per month. It is not a permanent form of credit and if it used as such can be

withdrawn by the bank, with a more regulated personal loan suggested in its place. The biggest risk comes with unauthorised overdrafts – either exceeding your authorised limit or having a

balance below zero when no authorised overdraft is in place. The French Banking Federation says banks might tolerate this for a brief period and honour payments, charging a fee for each

overdrawn transaction, called a commission d’intervention. These are often in the region of €8 or €12 per rejected transaction, and can soon add up and make your situation even worse,

although some banks cap these at anywhere from €30-€90 per month. However, the FBF warns that not every payment will be approved – transactions above a certain size or that push your balance

below a certain level, as set in your account terms and conditions, will be refused. These rejected payments also attract fees: anything up to €50 for a cheque and €20 for a transfer, so it

is essential that you talk to your bank as early as possible to find a solution. If you cannot reach an agreement with them, and all internal complaints routes are exhausted, every bank has

an independent mediator, who has two months to respond. See www.tinyurl.com/bankingmediators