Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Extortionate Fees Push Bank Overdraft Costs to a New High

Personal_Finance / Current Accounts Jul 12, 2016 - 02:34 PM GMT

By: MoneyFacts

Personal_Finance

In March 2009 the credit crunch started to bite and base rate fell to its historic low of 0.50%. Since then, the cost of borrowing using a current account has risen, and it has now hit yet another high. Indeed, the latest research by Moneyfacts.co.uk can reveal that authorised overdrafts could now cost borrowers as much as £180 a year.


Traditionally, providers charged interest when customers dipped into the red; however, this structure is dying out with most accounts now opting to charge flat usage fees instead. In July 2008, only 22% of non-fee charging current accounts levied a usage fee for an arranged overdraft, but this figure has now hit a record high of 56% - almost two-thirds of the entire market. This has resulted in the average monthly fee rising from £1.15 in July 2008 to a high of £6.93 today.

However, the worst charges could be avoided if customers were to opt for more competitive accounts or even a basic bank account, which does not have an overdraft facility at all.

Rachel Springall, Finance Expert at Moneyfacts.co.uk, comments:

“Current account customers often turn to an overdraft in order to quickly and conveniently borrow money for a short term, but in recent years the cost of dipping into the red has become extortionate. The average cost of a high street bank overdraft (as shown in the above table) is now six times higher per month than it was eight years ago, after having risen from £2 per month in 2008 to £12 today.

“At a time when the cost of borrowing using a loan, credit card or mortgage is falling, it’s disappointing to see that bank account customers are not seeing the same reductions. Those customers who use an arranged facility will be the hardest hit by rising costs; unauthorised fees have fallen in recent years thanks to caps put in place to limit total charges, but while this is good news for those who unexpectedly go into an overdraft, diligent customers who arrange their borrowing are paying more in order to cover the cost.

“Transparency should always be encouraged in the banking sector, but an attempt at greater simplicity is also a root cause of increasingly costly overdraft usage fees. The Competition and Markets Authority (CMA) has urged banks to work harder for customers, but apart from lucrative switching incentives, nothing positive has happened for those who plan what they borrow.

“Customers who are struggling to resist the temptation to borrow via their overdraft may be better off switching to a basic current account, such as the Essential Current Account from Virgin Money. This account allows customers to set up direct debts and standing orders as usual but does not offer an overdraft facility, meaning the temptation to dip into the red is completely removed.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in