Lovemoney.com: Current account interest rates on overdrafts dramatically increased

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Lovemoney.com: Current account interest rates on overdrafts dramatically increased

Wed 8th Dec 2010

A finance expert from Lovemoney.com has highlighted how the interest rates being charged on overdrafts by banks have increased substantially.

Head of consumer finance at the company Ed Bowsher pointed out that these significant rises have occurred during a time when the base rate has been at a record low.

"I suspect some people aren't aware that they will be charged for an overdraft and, even more likely, that many people don't know how large the charges might be," he remarked.

Mr Bowsher pointed out that Barclays' Additions Active account charges customers 18.3 per cent interest for utilising the overdraft facility, which is 8.4 per cent more than it was in March 2008.

In his opinion, anyone who believes they may use an overdraft for a long period of time should avoid current accounts where the overdraft is charged on a daily rate as opposed to a percentage.

This week, the Bank of England revealed that the interest rate charged on such features reached the record level of 19.09 per cent in October 2010.

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