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Overdraft rate increases hit customers
Figures from the Bank of England have revealed that more than a quarter of current account holders have seen increases in their authorised overdraft rates.
Despite there being no change in the bank base rate for the past 18 months charges for overdrafts have continued to rise with some reaching 19 per cent.
Michelle Slade, spokesperson for moneyfacts.co.uk, said that overdraft customers are an easy target for banks, especially in the current economic climate as people are more likely to have to use their overdraft facility.
She added: "Customers are unlikely to complain or switch provider due to a small increase in rate, but when multiplied by the millions of customers each bank has, these rates soon generate increased revenue."
The situation for many is going to get worse as further public sector cuts are expected which will no doubt add to the current high unemployment rate.
For people who use their overdraft as a buffer, rate increase will not be as important but many people have no choice but to use their overdraft and increased rates will make a bad financial situation even worse.
The Bank of England's Monetary Policy Committee voted to freeze the base rate at 0.5 per cent in September.