Overdraft fees have reached a record high despite the current low base rate, new figures have revealed.
According to recent data, banks are now charging customers who go into the red an average of 19.1 per cent interest.
Despite the
Bank of England keeping the base rate at a record low of 0.5 per cent, many lenders have actually increased the amount of interest applied to overdrafts.
NatWest and Royal Bank of Scotland were among the banks recently exposed as among the worst offenders for such practice.
The Bank of England’s Quarterly Bulletin warns that some lenders are not passing on their savings to customers.
“During the recent financial crisis the Bank rate was reduced sharply, but in general the interest rates charged on new lending to households did not fall by as much and indeed some interest rates rose,” said the report.
According to figures from Moneyfacts, the overdraft rate on
Barclays Additions Active
current account has almost doubled since March 2009.
The report added that less competition within the industry due to consolidation may also have been a factor in pushing such fees up.
