Overdraft Rates Increasing
Research has shown that, despite recent reductions in the Bank of England interest rate, banks are increasing the rates customers pay on overdrafts.
Moneyfacts also reports that banks and building societies are cutting credit interest by more than the base rate cuts.
They go on to claim that since the 0.25% base rate cut, four of the big banks have increased the cost of borrowing by up to 3%. Authorised overdraft interest rates have been increased by Nationwide, Royal Bank of Scotland, Halifax and Natwest.
Since the start of the month, Halifax current account holders have been charged 19.5% interest on overdrafts, and increase of 0.6% on April rates. Meanwhile, Nationwide has announced a 3% increase in its rates to 12.9%.
NatWest and the Royal Bank of Scotland will increase rates on overdrafts of £5000 or more by up to 2.69% while actually reducing rates on smaller overdrafts.
10 institutions have cut credit interest paid on current accounts. Examples include Halifax, down from 6% to 5% from the start of the month, and the Nationwide Flax Account rate drops by 1.75% to 2% at the start of June.