At twenty six per cent, just over one in four UK personal and business bank account holders have experienced increases in fees over the last year and a half, despite the BoE’s Monetary Policy Committee pinning the base rate at 0.5 per cent.
According to new data gathered from banking site moneyfacts.co.uk, there have been some very egregious offenders in regards to incredibly high overdraft fees. One particular bank that has been hiking their rates on several of their financial instruments, Barclays has an Additions Active account that has increased its rates by 8.4 per cent over the last eighteen months.
As the current account has a rate today of 18.3 per cent, Moneyfacts claims that customers of the Barclays account have seen their yearly costs rise to £211, up from £28, with an average overdraft of £1,000.
Holders of the financial institution’s Premier Life account have additionally experienced a rate hike of 5 per cent, which rises the authorised overdraft rate up to 14.9 per cent.
Michelle Slade, spokesperson for Moneyfacts, stated that banks have found an easy target in overdrafts customers, in particular due to how the current economic environment has led to many customers to utilise an overdraft in order to make ends meet on a monthly basis.
Ms Slade added that there is a low likelihood of customers to switch providers or complain after a small rate increase, but if multiplied by the several million customers that each financial institution has, the revenue generated by all these customers put together can be substantial.
Ms Slade concluded her statement by pointing out that repayment of an overdraft is quite often the first thing to let slide by people experiencing financial difficulties, and with the job cuts in the public sector looming on the horizon, most financial institutions are bound to increase rates as defaults amongst customers become more likely.