Barclays ups overdraft costs but simplifies charges

26 March 2014

Barclays is to give all current account customers an interest-free £15 overdraft but will up its charges for those going further into the red.

In a move designed to simplify its charging structure, from June the bank will also cap daily charges customers can incur: from £62 plus overdraft interest, to £8. It will also limit the number of unpaid transactions they can be charged for to one a day and will remove paid transaction fees altogether.

In a statement, a spokesperson for Barclays said: "Customers will receive information on the changes to the way they will be charged, together with how to set up a range of alerts and supporting tools. These are in place to make the costs clear and to help customers to avoid fees."

However, money expert Andrew Hagger of, has warned customers to watch out for what are actually more expensive overdraft charges for many people.

He said: "I'm sure customers will find the charges easier to understand but I'm sure they'll be far from pleased when they realise how much extra they will have to stump up for using an agreed overdraft."

He gave the following examples of the increase in cost. A £200 overdraft at 19.3% currently costs 10p per day, but from June the charge will be 75p per day, which he pointed out is equivalent to an interest rate of 137%.

A £500 overdraft at 19.3% costs 26p per day, while from June the charge will again be 75p per day – an effective interest rate of 55%.

He added that someone who was previously been £500 overdrawn for seven days each month would have paid £22.21 a year in authorised overdraft interest with daily fees of 75p, but come June the annual cost will rise to £63.

Add new comment