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. |
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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. |
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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. |
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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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