Cost of overdraft charges reaches £4.7bn

Which? magazine said that HBoS, RBS and NatWest charged £118 for someone going £50 over their £250 overdraft limit for three days, which included direct debit, cheque and standing order charges.

This has prompted calls that such charges are unfair and risk pushing people deeper into debt.

“It’s time for banks to start treating their customers fairly by reducing excessive charges for unauthorised overdrafts and credit cards,” declared a spokesman for Which?

“Charges should cover only the banks’ true costs of dealing with late charges and exceeding overdrafts.”

News comes after the Office of Fair Trading declared earlier this month that it was not seeking to limit overdraft and other bank charges.

However, Which? declared that it has written to the Financial Services Authority to force banks to reduce their overdraft charges.

In the meantime, customers are advised to keep track of their debt levels and spending in order to ensure that charges do not mount up.|