Are banks sneakily raising interest rates on overdrafts?

According to a recent report a number of banks are raking in shed loads of extra cash by sneakily increasing the interest rates charged on overdrafts that have already been agreed with customers. Some customers are being hit with charges of almost 20% as a result of a change in the small print according to officials.

Many customers have no idea that the overdraft interest rate has been put up, and are left wondering why they are paying so much for their overdrafts. It is thought that banks are trying this tactic in order to try and gain back some of the revenue they lost through having to refund millions of pounds in overdraft charges.

A Liberal Democrat Treasury spokesperson has brought up the issue with the Office of Fair Trading. He stated: ‘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.’

Financial Expert Martin Lewis 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.’ The British Banker’s Association said: ‘Banks offer a range of overdraft and lending products to suit customers’ needs. They constantly review what they offer in the light of demand.’