QUESTION TIME

Your questions answered by an expert panel from Coopers & Lybrand

Earlier this month, I received a statement from the TSB, advising me of its intention to impose charges of pounds 33 on my account because I had been overdrawn for 11 days during July. The overdraft arose because cheques for June had been imposed upon the account, taking me overdrawn by about pounds 20. No attempt was made to advise me the account had become overdrawn.

Since I am unemployed and this is the latest in a catalogue of problems I have had with the account, I queried the manager, who has now agreed "on this occasion as a gesture of goodwill" to withdraw the charges. Is it legal for a bank to impose charges on charges in this manner?

The charges levied on bank accounts are covered by the terms and conditions of the relevant account. You should have received a copy, but if not it is obtainable from your local branch. Although the bank did not specifically inform you that you had become overdrawn, it would take the view that you had the information necessary to adjust your account balance to avoid the charges. While it does seem harsh, the situation you describe is common practice.

However, the banks do appear to be concerned over overdraft charges. Barclays this week announced it is to suspend overdraft charges for two working days where customers go accidentally overdrawn. If you have a complaint your bank cannot resolve to your satisfaction, you can write to The Office of the Banking Ombudsman, 70 Grays Inn Road, London WC1X, 8NB, Tel 0171 404 9944.

I have a Tessa with the Nationwide Building Society. Does this qualify me for membership and make me eligible for benefits should the society merge or convert into a bank? Also, can I claim continuous membership if I open a new Tessa with the same society?

The level of benefits for investors and borrowers has varied significantly with each building society merger, takeover or flotation, depending on the type of account.

The Nationwide classifies your Tessa as a share account, which means you are a member of the society. As such, you are likely to benefit from a larger bonus than most other account classes.

Not all building societies treat Tessas as share accounts, however, so investors should check on the status of each account.

The Nationwide says you will have continuous membership provided you close your matured Tessa and open a new one on the same day. In the meantime, your matured Tessa will qualify as a share account until it is closed but it will not receive interest tax-free.

Do premium bonds offer more than just a small chance to win a large prize?

Premiums bonds offer an attractive alternative to traditional deposits for cash holders. If you invest the maximum amount of pounds 20,000 and have average luck you will receive a tax-free return of 4 per cent, which is equivalent to 5.33 per cent for basic rate tax payers and 6.66 per cent for higher rate tax payers. This return is competitive with bank and building society notice accounts and premium bonds will also allow you to withdraw at eight days' notice.

The distribution of the smaller pounds 50 and pounds 100 prizes is the key to the 4 per cent yield. The odds are that you will win one prize each year for every pounds 1,250 of bonds held, although you may need to hold them for several years to average out your prizes. And in each draw there is always the small chance of winning the jackpot.