As Britain’s biggest banks return to court to defend overdraft fees, new research reveals average interest charges on overdrafts have increased to over 13% since June.
Seven banks and Nationwide Building Society yesterday launched a legal appeal against a ruling by the High Court earlier in the year that gave the Office of Fair Trading (OFT) the right to decide if overdraft charges are too high.
Yesterday, the banks argued that the decision was wrong, and that allowing the OFT to intervene in bank charges could have “serious consequences”. There is concern that should the OFT succeed in its legal battle over overdraft charges, then free banking in the UK could be at risk.
The signs suggest that banks are continuing to squeeze customers despite the court case. Research from price comparison website MoneyExpert.com reveals banks have reduced the penalties levied at people who go overdrawn without permission but have increased charges on authourised overdrafts.
It found that the average authorised overdraft charge is now 13.06% compared with 11.71% in June. The average unauthorised overdraft charge, meanwhile, has fallen from 20.93% in June to 19.85% today.
Sean Gardner, director, MoneyExpert.com, says the figures indicate the shape of things to come.
“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 adds.
Some of the best and worst authorised overdrafts:
|Current Account||Authorised overraft rate|
|Bank of Scotland|
Ultimate Reward Account
Current Account Plus
Premier Life Account
Premier Current Account
|Source: MoneyExpert 29/10/08|