Overdraft rate hikes ‘could worsen debt concerns’

Increases in authorised overdraft rates could soon result in more people requiring debt management help, new figures have suggested.

Released by Mo…

Increases in authorised overdraft rates could soon result in more people requiring debt management help, new figures have suggested.

Released by Moneyfacts.co.uk, the statistics show more than a quarter (26 per cent) of current accounts have witnessed hikes in overdraft rates in the last 18 months.

This is despite there being no alteration to the bank base rate.

Barclays Additions Active customers have been the hardest hit, as they have seen a 8.4 per cent jump in the last year-and-a-half.

The website calculated an Additions Active account holder with a £1,000 overdraft would have experienced their annual overdraft costs swell by £28 to £211 – a figure that takes into account the £300 buffer amount.

Other accounts to have seen notable rises include the Northern Choice Plus from Northern Bank – which escalated from 6.86 per cent in March 2009 to 9.37 per cent today – and the Premier Life product from Barclays Bank, which rose from five per cent to 14.9 per cent in this time.

Accounts from Citibank, Royal Bank of Scotland, Clydesdale Bank, Yorkshire Bank and NatWest were also earmarked by the portal, among others.

Michelle Slade, spokesperson for Moneyfacts.co.uk, described overdraft customers as an easy target for banks.

"While the majority of customers use an overdraft as a buffer facility, some have no alternative but to regularly push their overdraft to the limit," she explained.

The Trades Union Congress recently identified a series of spending cuts imposed by the government since it took power could be adding to the debt worries of the poorest households in Britain.

By Joe White
 

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