Banks criticised for upping cost of overdrafts

By DAILY MAIL REPORTER
Updated:

money

Extra cost: The average rate on an authorised overdraft has jumped 1.35 per cent since June

Banks were criticised yesterday for hiking the cost of their overdrafts piling further pressure onto cash-strapped customers.

Since June, the average rate on an authorised overdraft has jumped 1.35 percentage points despite the Bank of England cutting rates by a half-point.

The average rate is now 13.06 per cent, compared to 11.71 per cent, according to the research from the comparison website MoneyExpert.com.

The higher rates are a blow for millions of customers who are increasingly forced to rely on their overdrafts to find the money to pay soaring bills.

But the steeper charges mean their battle to get back into the black is even more difficult.

Sean Gardner, director of MoneyExpert.com, said: 'While attention has been focused on whether or not banks will survive in the current financial crisis, they've been quietly raising rates for borrowers and reducing them for customers in credit.

'The Bank of England may have cut rates with the likelihood of bigger cuts to come but customers using their agreed overdrafts are not feeling any benefit.'

He warned it is 'the shape of things to come' as banks prepare to raise money from every possible source, particularly if they lose a long-running court case about bank charges.

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