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15 Nov 2019

Go Direct Personal Finance News  2009

Average overdraft rate at decade high

Despite bank base rate being at an all time low, authorised overdraft rates have hit their highest level in a decade.

The average authorised overdraft rate now stands at 14.22%. The last time overdraft rates were this high, bank base rate was 6.00%.

 

May-00

May-01

May-02

May-03

May-04

May-05

May-06

May-07

May-08

May-09

May-10

Average Overdraft Rate

14.78%

13.51%

12.65%

12.53%

11.81%

12.39%

12.40%

12.97%

13.35%

13.61%

14.22%

Bank Base Rate

6.00%

5.50%

4.00%

3.75%

4.00%

4.75%

4.50%

5.25%

5.00%

0.50%

0.50%

Source: Moneyfacts.co.uk 12.5.10.

Despite no change in bank base rate in the last 14 months providers have continued to raise overdraft rates, including:

Provider

Account

Increase

Current Rate

Date of Change

Barclays Bank

Additions Active

3.40%

18.30%

May 2010

Barclays Bank

Additions Active

3.00%

12.90%

May 2009

Barclays Bank

Bank Account

1.40%

19.30%

May 2009

Barclays Bank

Current Account Plus

1.40%

18.30%

May 2010

Barclays Bank

Premier Life

2.00%

14.90%

May 2010

Barclays Bank

Premier Life

3.00%

12.90%

October 2009

Clydesdale Bank

Current Account Plus (inc Offset)

1.90%

18.85%

October 2009

Clydesdale Bank

Signature Current Account

1.55%

12.50%

October 2009

Nationwide BS

FlexAccount

1.00%

18.90%

June 2009

Norwich & Peterborough BS

Gold Current (less than £500pm funding) 

2.00%

20.90%

July 2009

Norwich & Peterborough BS

Gold Current (£500pm to £1,499 funding) 

2.00%

13.79%

July 2009

Norwich & Peterborough BS

Gold Current (£1,500pm+ funding)

2.00%

11.74%

July 2009

Yorkshire Bank

Current Account Plus (inc Offset)

1.90%

18.85%

October 2009

Yorkshire Bank

Signature Current Account

1.55%

12.50%

October 2009

Source: Moneyfacts.co.uk 12.5.10.

Michelle Slade, spokesperson for Moneyfacts.co.uk commented:

“Despite eventually winning the OFT case, banks made significant changes to the level of charges they will levy for unauthorised borrowing.

“Changes made to reduced unauthorised borrowing charges meant banks lost a significant revenue stream, something they can ill afford in the current climate.

“As one revenue stream closed inevitably they have moved to find another.

“The loss of income gained from a minority of customers is now being recouped from all customers who use an agreed overdraft.

“Banks are likely to be making more now from these increases than they ever were from penalty charges.

“Customers remain reluctant to switch current accounts, but it’s a decision that could leave them out of pocket, as the biggest current account providers in the UK have some of the highest rates on the market.

“Having an account paying a competitive rate of credit interest is not much use if you spend most of the month in your overdraft.

“Switching to an account with a competitive overdraft deal could save you hundreds of pounds.

Overdraft Best Buy

Provider

Account

Min Funding

Authorised Overdraft

Alliance & Leicester

Premier Direct Current

£500 pm

0% for the first 12 months, then 50p per day, maximum £5 per month

Norwich & Peterborough BS

Gold Current

£1,500 pm

11.74%

Cahoot

Current Account

None

11.80%

Santander

Preferred Overdraft Rate Account

£1,000 pm

12.9%

The Co-operative Bank

Current

None

15.9%

Smile

Current

None

15.9%

Source: Moneyfacts.co.uk 12.5.10.

 

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.

 

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