Is your overdraft facility costing you a fortune?
Many consumers in the UK have come to rely on their overdraft facility attached to their bank account, and an alarming number of individuals and households find themselves back in the red within days of their salaries being paid into their bank accounts, demonstrating just how reliant many have become on their overdraft each and every month. And now it seems that banks may be cashing in on this overdraft dependence by hiking up interest rates on overdrafts for those that borrow more than a certain amount.
Most banks that offer an overdraft facility on their accounts offer a fee-free overdraft up to a certain amount, such as one hundred pounds or two hundred and fifty pounds depending on the bank and type of account held by the consumers. However, for those that need overdraft facilities over and above the fee free amounts it seems that interest rates with many major banks have soared, which means that it costs even more for consumers to benefit from a higher overdraft facility.
Amongst the major banks that have been increasing their overdraft facility interest rate charges are Lloyds Bank, HSBC, and Natwest. According to officials from the banks the rises in overdraft facility interest rate rises are a combination of competition with other banks and recent rises in Bank of England interest rates. It is thought that with the rises in overdraft facility interest rate charges each of the banks could see an additional twenty million in revenue for this year.
Banks have also found other ways to try and make additional money from consumers over recent months, such as charging for accounts that were previously free and by charging extra for upgraded accounts that offer a number of benefits such as travel insurance, car recovery services, and various discounts.
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