Barclays hikes overdraft rates

By CHARLOTTE BEUGGE FOR MAILONLINE
Updated: 05:34 EST, 27 May 2009

Barclays is increasing the overdraft rates on its packaged accounts by nearly a third - and has upped interest rates on all but one of its mainstream current accounts.

On the up: Barclays' overdraft rates

Customers with its Additions Active account will, from 8 June, see their authorised overdraft rate rise from 9.6% to 12.9% - a 30% increase.

Additions Active is a packaged account that comes with a £300 interest-free overdraft, travel insurance, car breakdown cover and other insurances, at a cost of £14 a month.

Other Additions accounts - which are closed to new customers - will also suffer this rate increase, while rates on other Barclays accounts are also set to change from 8 June.

The overdraft rate on its Higher Education Account, used by graduates, is rising from 15.6% to 19.3%, making it one of the most expensive rates charged by a High Street bank.

The Barclays Bank Account with Executive Overdraft rate will go up from 17.9% to 19.3%, the same rate that is charged on Barclays Personal Overdraft.

Both the Premier Current Account and the Barclays Bank Account with Platinum Banking will charge 14.9% on overdrafts from 8 June - up 2.4 and 2.9 percentage points respectively. They are closed to new customers.

Only customers with Current Account Plus get a rate cut - down from 17.9% to 16.9%. This is a £3-a-month packaged account with added insurances.

A Barclays spokesman says: 'Where we have been able to, we have kept our overdraft rates the same or we have reduced them as in the case of our Current Account Plus. For some accounts this has, unfortunately, meant an increase.

'We do not make any changes lightly, and it is the first change to overdraft rates for many of these accounts for several years. Our overdraft rates remain among the lowest of our competitors.'

He adds that the changes have been made because of an 'increasing number of customers failing to repay their overdraft as well as the cost of providing the overall package of services'.

Michelle Slade, of Moneyfacts, says: 'Barclays has never been that competitive anyway. They've not paid credit interest for a while, and they're the first to increase rates on their overdraft deals since last year when a number of businesses put them up.' Currently, the lowest overdraft deal is on the Alliance & Leicester Premier Account, which has a 0% interest rate but a usage fee of up to £5 a month.

The Cumberland BS's current account overdraft rate is 7.99%, while Norwich & Peterborough's rate is 9.74%. Among the main High Street banks, the lowest rate is on Abbey's Current Account (the no-credit interest option) which charges 12.9%. The highest overdraft rate on the High Street is 19.9% and is charged by HSBC, as well as Abbey on its current account (credit interest option).