PPI Claim News - 4/11/2009

Confusing' bank charges on overdrafts costing consumers '£300 a year'

British consumers could be shelling out £300 a year in bank charges simply through choosing the wrong overdraft facility.

That is according to new research, which found that 50 per cent of UK adults make use of the overdrafts that come with their bank accounts on a regular basis.

And while most are able to benefit from some much-needed financial flexibility at little cost, a significant proportion are falling foul of strict rules on going overdrawn and being presented with hefty bank charges as a result.

Indeed, the Moneysupermarket.com study found that many consumers are being hit by fixed-rate charges of up to £2.50 a day, with these having replaced interest payments based on the amount borrowed.

Commenting on the figures, Kevin Mountford, head of banking at the website, said: "The industry has tried to simplify the charging structure for overdrafts but has actually left consumers more confused.

"It is vital people understand that not all providers use the same charging structure and whether they opt for traditional interest charges or fixed fees, the key is choosing the right product for their borrowing needs."

News of the findings come as HBOS continues to face a customer backlash over plans to introduce a £1-a-day bank charge on overdrawn accounts from the start of December.

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