Current account interest rates on overdrafts tend to be high, states Money Advice Scotland

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Current account interest rates on overdrafts tend to be high, states Money Advice Scotland

Fri 17th Sep 2010

Consumers have been told by Money Advice Scotland that overdrafts are an expensive way of borrowing money.

Yvonne MacDermid, chief executive of the organisation, pointed out that banks are technically allowed to call in the amount owed on an overdraft "at any time".

She suggested that consumers are opting to use such facilities because they are either finding it hard to get credit through other methods, or they are not willing to commit to a longer-term loan.

In her opinion, there is an element of risk involved for banks as well.

Ms MacDermid remarked: "They do need to look at the risk element, it's still an advance if you like. It's still allowing people to maintain their standard of living, so there is still a risk attached to it."

This week, the Financial Ombudsman Service revealed there were 15,000 complaints made by UK consumers regarding unauthorised overdraft charges in the first half of the year.

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