Customers ‘unaware’ of bank charges
Two-thirds of people have no idea how much they would be charged by their bank if they went into the red, a new survey has shown.
Among those who claimed they knew how much interest they would pay on an authorised overdraft, 35% thought the rate would be less than 5% and a further 32% thought they would pay between 5% and 10%.
In reality, banks charge an average of 12.35% to people who borrow money through an authorised overdraft, something only 12% of people were aware off, according to financial website MoneyExpert.com.
Consumers were also in the dark about charges for unauthorised overdrafts, with 41% admitting they were completely unaware what charge their bank would levy if they breached their overdraft limit, while 13% of people thought they would be charged less than £20, when the typical charge is actually around £28.
Sean Gardner, chief executive of MoneyExpert.com, said: “Bank charges may be a hot topic in the media but many people’s idea of how much they are being charged for their overdrafts is horribly wide of the mark.
“Going overdrawn can be costly. Average unauthorised overdraft interest rates are around 25% and fees for going in the red without permission can be as much as £30.
“It’s critical that people check with their bank to ensure they are borrowing money at a competitive rate.”