Banks raking in millions through sneaky overdraft tactics

According to a recent report banks in the UK have been raking in a fortune recently by sneakily increasing the interest rates on agreed overdrafts on customers’ bank accounts. Banks have lost millions of pounds over the past couple of years due to overdraft charge claims, and it is thought that this move is designed to try and claw back some of revenue that has been lost through reimbursing these charges to customers.

Some customers are facing charges of almost 20% according to the report, and this stems from a change in the small print. Officials said that some customers are not even aware that their overdraft interest rate has gone up, and do not know why they are paying more for their overdraft. Officials are concerned that the overdraft interest rates have been hiked up even though the Bank of England base rate has remained static at 5% for the past five months.

Liberal Democrat Treasury spokesman Lord Oakeshott said that he has contacted the Office of Fair Trading over the matter, because consumers are being ripped off. He said: ‘This may not be technically illegal but it is the sharpest of sharp practices. Banks must not be allowed to screw their customers to make up for losses elsewhere.’

An industry official said: ‘We would recommend consumers…look to switch away from providers that start making sneaky changes.’

Another industry expert said: ‘Banks are not our friends, to help us out when we get into financial trouble. They are institutions out to make money for their shareholders.’

However, the British Banker’s Association stated: ‘Banks offer a range of overdraft and lending products to suit customers’ needs. They constantly review what they offer in the light of demand.’