The Co-operative scraps charges on overdrafts
Interest charges are being frozen for three months for some customers of The Co-operative bank to help them cope with Christmas debts.
Customers with qualifying accounts will see their interest charges put on hold from 5 January until 4 April.
This could see a saving of £74.22 for people with overdrafts of £2,000, and £37.11 for overdrafts of £1,000.
The Co-operative has made this move to help customers tackle their debts but also to bring some competition to the high street.
To be eligible you must have a current account with a standard overdraft, which has been previously applied for and accepted by the bank. But the Cashminder, student, business and corporate banking accounts are not included.
A helping hand
The bank says the average British adult built up £749 in debts last year and only 27% plan to pay it back in the next 12 months. The most common methods of borrowing money were across credit cards, personal loans and arranged overdrafts.
Robin Taylor, head of banking at The Co-operative Bank, says: "In these difficult economic times, we want to offer a helping hand to those customers, who may be struggling financially and give some additional support to those whose finances may be stretched after the festive period.
"This move again highlights how we are looking to bring some much needed competition to the high street, by providing customers with a genuine alternative to the big five banks."
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.