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Current account customers feel the pinch

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The current account market has seen plenty of rate changes since the Bank of England cut interest rates by 0.25% in April, but some lenders have used the opportunity to tweak their rates by more than that amount, according to Moneyfacts.

Michelle Slade, analyst at Moneyfacts, said: “The last month has seen some institutions cut credit interest rates by as much as 1.75% and others put overdraft rates up rather than down.

“A lot of the biggest moves have been by the major high street lenders, meaning a large proportion of the population are going to be hit at a time when they can least afford it.

“This is really disappointing news for current account customers, particularly in the wake of the success in the High Court by the Office of Fair Trading (OFT). When the OFT announced that credit card default fees were too high, the institutions cut these charges but raised charges elsewhere to compensate for the lost revenue.

“It could well be that the banks and building societies are pre-empting a reduction in overdraft fees when the OFT case is finally settled. As a result, they are reducing credit interest rates and increasing overdraft rates now in order to continue to fund the free banking we are used to in the UK.”

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