You are here: Home - Saving & Banking - News -

Banks back down in overdrafts row

Written by:

Banks are backing down in the row over unauthorised overdraft charges, with average rates dropping by more than 5% in the past year, research from shows.

The price comparison website says the average unauthorised overdraft rate is now 20.01% compared with 25.25% a year ago.

Banks are currently waiting for the High Court to rule on allegedly unfair overdraft charges following a court case brought by the Office of Fair Trading after campaigners urged customers to reclaim fees.

And research shows the banks have started to move ahead of any decision although there is a long way to go still.

Around nine providers – including nationalised Northern Rock – still charge 29% or higher for customers going into the red without permission. And 52 of the 136 accounts from 27 providers charge more than 25%.

Sean Gardner, chief executive of, said: “The current account market is changing rapidly with new accounts being launched regularly offering high rates for being in credit and low rates for being overdrawn.

“It is encouraging that average unauthorised overdraft rates have dropped by 5% in the past year. That said though, a 20% rate is still very high and well above the average standard credit card rate. Anyone who thinks they may go into the red without permission should speak to their bank as soon as possible and certainly before they go over their limit as the penalties are still severe for what might be just a one-off mistake.”

Only 41 out of the 136 accounts on the market do not charge a monthly fee for being overdrawn without permission and the average penalty is £22.80. Around 65 of the 136 accounts offer some form of interest-free overdraft. Average charges for a bounced cheque or unpaid direct debit is £28.29.

The highest unauthorised overdraft interest rate is 30.5% from Ulster Bank. Others with accounts charging more than 29% include Royal Bank of Scotland, NatWest, Halifax, Citibank, Yorkshire and Clydesdale.


Tag Box




Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
Outlook favourable for large-cap stocks

Increased dividend payments recently announced by several major UK companies will benefit investors this year and over the long term,...