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

Bank overdrafts just as expensive as payday loans says Which?

Written by:
Using an authorised and unauthorised overdraft with your bank can be just as expensive as taking out a payday loan, found a new Which? investigation.

According to the consumer rights campaigner, borrowing £100 for 31 days will cost £30 with a Halifax authorised overdraft or £20 with some Santander accounts, and borrowing the same amount for the same time with a payday loan company costs between £20 and £37.

The research also showed that, similar to rolling over a payday loan, people can rack up sky high default charges if they use an unauthorised overdraft, and be hit with high interest and charges if they stay in their unauthorised overdraft for long periods.

With the Halifax Reward current account and the Santander Everyday Account it can cost £100 in charges for going £100 into an unauthorised overdraft for a month.

Which? said that the Financial Conduct Authority’s (FCA) proposed new rules to clamp down on lenders won’t cover high penalty and default fees for payday loans, overdrafts and other high-cost credit products.

Which? thinks this is a major omission and has launched the Clean Up Credit campaign calling on the FCA to crack down on poor lending and unscrupulous practices across the whole market. We want to hear from consumers about their experiences of using credit, and we will share this with the FCA to encourage it to set tougher new rules.

Richard Lloyd, Which? executive director said:
“The Government and regulators have rightly focused on the scandal of payday lending, but they must not lose sight of the urgent need to clean up the whole of the credit market. High street bank overdraft fees can be just as eye-watering as payday loans.

“Consumers need the credit market to work competitively. It’s time to clamp down on excessive charges and irresponsible lending, and to make sure borrowers are being treated fairly whatever form of credit they’re using.”


Tag Box

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.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

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.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

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...

Money Tips of the Week

Read previous post:
FundsNetwork to offer clean share classes only by year-end

Fidelity's FundsNetwork platform is to offer all new unwrapped investments, ISA, and pensions through clean share classes only by the...