Rising interest rates on current account overdrafts are costing people in the UK hundreds of millions of pounds every year, financial analysts have warned.
Analysts say that the UK could save itself £700 million a year if people found the best current account overdraft rate to suit them, rather than putting up with high charges and rising fees.
A bounced cheque costs an average £32.22, or 31.67 per cent more than in 2003, unpaid direct debits cost an average £31.33, or 13.97 per cent more and unpaid standing orders cost an average £31.06.
One off charges for dipping into the red on a current account are also increasing, with some unauthorised overdrafts costing nearly £100 in fees.
Three quarters of all current accounts have overdrafts, with more than two fifths overdrawn at any given time.
Millions are paying rates of around 15 per cent, when if customers compare current accounts from different providers they would find that rates as low as nine per cent are available.
“Most people today see an overdraft as an essential part of their current account and frequently rely on it to support the cost of day-day life,” Simon Ripton, current accounts manager at Alliance & Leicester told MyFinances.
“It’s astonishing that there is still so much confusion about whether or not you’re allowed to switch with an overdraft,” he added.
© Adfero Ltd