Rise in current account interest rates for overdrafts 'not surprising', says Money Advice Trust

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Rise in current account interest rates for overdrafts 'not surprising', says Money Advice Trust

The Money Advice Trust has suggested it should not come as a major surprise that interest rates for overdrafts are on the rise.

Helen Newton, a spokesperson for the organisation, explained the cost of consumer credit is increasing across the board, with credit card interest rates also creeping up.

She said: "The rationale for this, provided by the Bank of England in its latest Trends in Lending report, is that the higher cost of credit is required to offset the level of credit defaults."

Ms Newton pointed out that this situation can lead to a dangerous cycle, in which a person who cannot meet their debt repayments sees the price of borrowing go up and this makes a sum even harder to pay back.

The Bank recently announced the publication of a survey regarding people's attitudes to inflation, with 54 per cent of respondents saying the state's inflation target is about right.

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