May 31, 2006

By Peter Kenny

A survey by Which? Has revealed that bank overdraft charges have risen to an astonishing figure of £4.7 billion.

Current unauthorised overdraft charges are between £20 and £30 while at the same time standing order and direct debit charges, while in the red, were coming in at £25 to £30 per transaction.

Which? Found that the worst offending banks were Royal Bank Of Scotland, NatWest and HBOS. It was found that these three banks would take an extra £118 from an account going £50 over a £250 authorised overdraft, for three days. These charges would be applied to direct debit and standing orders and cheque overdraft charges.

The Abbey had the next highest charge for the same scenario at £110, while Northern Rock had the lowest with £28 being charged.

A spokesman from Which? said, "Many thousands of people are fed up with being made to pay unreasonable charges and are preparing to do something about it"

"It's time for banks to start treating their customers fairly by reducing excessive charges for unauthorised overdrafts and. Charges should cover only the banks' true costs of dealing with late charges and exceeding overdrafts."

The Office of Fair Trading (OFT) in April demanded that credit card companies cut their charges to £12. At the same time the OFT decided that the same charge reduction should also apply to bank overdrafts and mortgage fees. Which? Have argued that the recommendation from the OFT to the banks has been too vague. In fact since April no Bank has reduced their overdraft charges.

The Which? magazine was launched in 1957 by Consumers' Association, an independent charity.