Bank Overdrafts ‘Cost More Than Payday Loans’

Bank customers with unarranged overdrafts are being charged up to 12 times more than payday lenders.

Some banks are charging customers several times the fees of payday lenders to borrow money, an investigation by Which? has found.

Looking at unarranged overdraft charges, the consumer group found that consumers needing as little as £100 could be charged over 12 times more by major high street banks than the amount the Financial Conduct Authority (FCA) allows payday lenders to charge.

Which? compared the cost of borrowing £100 for 28 days and found that charges at some high street banks were as much as £90 – up to four times the maximum charge of £22.40 on a payday loan.

It found that some RBS customers could face costs of £90, while customers at Lloyds, HSBC and TSB could face £80 in costs.

Unarranged overdrafts have already come under the spotlight recently as the Competition and Markets Authority (CMA) has proposed that banks should set their own monthly unauthorised overdraft charge cap, which they would have to show clearly.

Read on.

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