UNAUTHORISED overdraft charges are being cut as banks await the outcome of a recent High Court test case on the issue, figures showed yesterday.
The average interest rate charged by current-account providers to people who go into the red without permission or breach their agreed limit has come down from 25.25 per cent a year ago to 20.01 per cent.
At the same time, 41 of the 136 current
accounts available charge no monthly fee to people with unauthorised overdrafts, while 65 accounts also offer an interest-free buffer, according to MoneyExpert.com.
Banks are awaiting judgment in a High Court test case which could pave the way for a ruling on how much banks can charge for unauthorised overdrafts.
The case was bought jointly by the Office of Fair Trading and seven high-street banks and a building society to settle the issue after consumers began to reclaim millions of pounds through the courts.
The MoneyExpert.com research found that nine current- account providers still charged 29 per cent or more to people who failed to arrange an adequate overdraft, including the recently nationalised Northern Rock, while 52 accounts charged more than 25 per cent.
Among accounts that do charge a monthly fee for being overdrawn without permission, the average penalty is £22.80, while the average charge for a bounced cheque or unpaid direct debit is £28.29.
Sean Gardner, chief executive of MoneyExpert.com, said: "The current-account market is changing rapidly."
The full article contains 256 words and appears in The Scotsman newspaper.
