Santander’s overdraft charges are six times higher than 2008 as big banks maximise profits
A record 56 per cent of current accounts now charge an overdraft fee, compared to just 22 per cent in mid-2008
BANKS are charging six times more for an overdraft now than during the financial crash, a study found.
Lenders only used to charge interest but increasingly issue monthly fees to maximise profits.
A record 56 per cent of current accounts now charge an overdraft fee, compared to just 22 per cent in mid-2008.
The average monthly fee has risen from £1.15 to £6.93, MONEYFACTS.CO.UK says.
A customer £300 in the red for 15 days will typically pay £11.59 a month, or £139.08 a year, in fees and interest. In 2008, it would have been £2.19 a month, or £26.28 a year.
HALIFAX and SANTANDER charge the most in this scenario, £180 a year, the website found. BARCLAYS would charge £135 a year, with RBS-owned NATWEST taking £101.40 and LLOYDS £99.
Santander’s forerunner ABBEY charged just £19.08 in 2008, meaning customers who moved to the new lender are now paying 9.5 times more.
The rises have come as the Bank of England interest rate stayed at 0.5 per cent, cutting the cost of other borrowing.
So banks have had to find other ways to make money.
Moneyfacts’ finance expert Rachel Springall said: “The cost of dipping into the red has become extortionate.”
She pointed out those with arranged facilities were hardest hit, with unauthorised overdraft fees actually falling thanks to caps.
An expected interest rate fall to 0.25 per cent, with a decision due tomorrow, would put further pressure on banks.