Overdraft rates see another increase
Published On 14 December 2006
Overdraft rates have risen again in the past few months following base interest rate increases, new research has found.Moneyfacts.co.uk said that several banks were raising their overdraft rates every time the base rate increased – even though the accounts were not directly linked to the Bank of England base rate.
Michelle Slade, an analyst at moneyfacts.co.uk said with bank charges in the spotlight, "increases to overdraft rates may go unnoticed by many consumers".
"However, with many people reliant on an overdraft facility for their day-to-day living, such increases, however small, could prove to be a big revenue earner for the banks," she added.
She recommended customers review their banking arrangements "as some of the overdraft increases we have witnessed are quite substantial".
Some banks were also "tweaking their overdraft terms and conditions", she said, citing Lloyds TSB for removing its £10 fee free buffer and HSBC for removing its paid item fee structure.
Current account providers may be attempting to pre-empt moves by the Office of Fair Trading to cut down on banks penalty charges, Ms Slade added.
Around 52 per cent of people use an overdraft facility, a poll by moneyfacts.co.uk shows. And according to research by internet bank Egg, one in three have been charged an average of four times for going overdrawn.
