Banks add new fees for agreed overdrafts
Careful current account customers who borrow money by temporarily dipping into a pre-arranged overdraft have seen their costs shoot up as providers slap on extra fees, research by a financial website has found.
Nearly two-thirds (63%) of standard current accounts now impose a usage fee on a customer if they go into an authorised overdraft, compared with just 22% which did this in July 2008, according to Moneyfacts.co.uk.
These standard accounts are not ones which charge a regular fee, such as packaged accounts.
Providers have traditionally charged interest on the amount customers borrowed on their overdraft, but in recent years other fees, such as usage fees, have been introduced. These fees can replace the usual interest rate - or be charged on top of interest.
Moneyfacts calculated that a customer with a main high street bank who goes overdrawn by £300 for 15 days of the month in a row, may end up being charged nearly £140 a year in fees for using their authorised overdraft. This is five times the average cost in 2008.