Overdraft charges accelerating disproportionately, financing study shows

Thu, 14 Jun 2007

Many banking customers have seen their overdraft charges rise at a disproportionately high rate over the past few weeks, according to a financing analyst.

Research from financing portal uSwitch.com has discovered that several banking institutions have hiked interest on authorised overdraft facilities following the Bank of England's decision to raise interest rates in May 2007.

However, while the base rate was upped by 0.25 per cent, a study of nine financial services providers reveals that the average rise in overdraft charges was 0.93 per cent.

Moreover, two high street banking institutions have raised overdraft fees by two per cent, according to the financing report.

Commenting, Mike Naylor, personal finance expert at the financing website, said: "We would recommend that consumers keep a very close eye on the interest rates on their current account and look to switch away from providers that start making sneaky charges."

Banking customers who find themselves unable to afford increased overdraft charges may be left trying to borrow money from other sources.

According to recent research from Alliance & Leicester Personal Loans, 40 per cent of 35-44 year olds in need of money list personal loans as their preferred method of borrowing.

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