'My overdraft cost will nearly double - why am I being punished?'
Claire Griffiths
NatWest is just one of several of the major banks to have recently announced much higher interest rates for overdrafts, in some cases twice as much as they were charging before.An investigation by financial regulator the Financial Conduct Authority found that banks were making £2.4bn a year from overdrafts.
The FCA decided these charges were too high and too confusing so it banned treating people with unarranged overdrafts differently and it banned daily or monthly charges. The new rules will come into force from April this year. It is still open to banks to charge vulnerable customers more by applying a higher interest rate to their borrowing.
Some customers, like Ms Griffiths, will lose out. For the most part they are people who borrow more and borrow for longer.For instance, £500 borrowed for 30 days will cost an extra £5.77 from HSBC and £6.82 from Nationwide. An unarranged overdraft of £100 for a week will be £52 cheaper with Santander and £55.35 cheaper with NatWest.
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